Guest blog: Coffee with a side of banking… is the US experiment the future branch model

A delegation from the building society sector recently participated in the BSA's United States Study tour aimed at learning lessons for the future from the thriving US mutual model.

Chris Hunter, Deputy Chief Executive at Darlington Building Society, took part in the tour and shares his experience of an innovative branch visit.

I recently participated in the BSA's United States Study tour where I and four other liked minded building society executives and Robin Fieth (BSA CEO) explored the North Eastern coast of America in search of inspiration on how we as individual societies and a sector, thrive and collaborate.

Like the UK, the mutuality model thrives in the States, and their wider financial services offering is known for innovation in the industry. Which is why I was honoured to participate in the latest study tour of Washington and Boston, with the Building Societies Association.

Our delegation explored the northeastern coast of America in search of inspiration on how to develop our individual societies and from a broader sector perspective, we asked ourselves how might we adapt to stay relevant for current and future members?

In a world of fintech and modern banking, the term "innovative" is bandied around with reckless abandon. However, while in Boston, I was introduced to a wholly different delivery model, led by dynamic business partnerships in an engaging space, with servicing slotted seamlessly into the daily (coffee) grind.

Would adopting a similar approach in the UK support the longevity of our high-street branch model?

Coffee with a side of banking

Within 50 yards of our hotel in Boston was CapitalOne Café, a brand new 'bank branch' in the city's thriving Seaport district. Capital One is a well-known credit card provider in the UK but a sizeable universal banking provider in the US.

Intrigued, I entered the café (or branch?) at 8am and met Carlos, a very friendly and helpful assistant armed with a laptop and the ever-present American enthusiasm for service.

Carlos explained the concept. Partner with an up-and-coming coffee brand from California and create a social hub for the young affluent demographic at the entrance to Seaport, just over the river from the main financial district. Supply what they want and provide the services they need, all from a place where they evidently enjoy spending time.

Simple, really.

From the café, Capital One customers can access ATMs to withdraw cash, book meeting rooms for their own needs, enjoy 50% off coffee, and speak to Carlos about their banking needs-out in the open or discreetly in a private interview room. If you didn't bank with Capital One, you could still connect to the free Wifi and work from the open plan desks.

Upstairs, there's a larger space that is available free of charge to local non-profit organisations to create a shared space. This is not dissimilar to how Darlington Building Society shares its branch spaces with its nominated 'Local Five' charities.

The branch is open much longer than UK hours, seven days a week, from 8am to 7pm on weekdays and from 9am to 6pm on weekends. It's staffed by a rotation of six full-time employees, and the café and branch, save for ATM withdrawals, is cashless to reduce the security concerns of sole workers.

The future of branches?

When questioned why Capital One delivered this experimental branch when they were closing traditional branches across the US, Carlos says simply, "This is marketing. We are building a brand, becoming known in a thriving area frequented by our target growth customers, so they think of us in the future when they want financial services."

Certainly, this is a challenge traditional financial institutions around the globe face. Competing with challenger banks and digital entities, how can we engage with tomorrow's savers and borrowers earlier so they think of us when it comes to making key financial decisions? Slotting into their everyday habits/ routines and caffeine fix makes sense.

Carlos was unsure the café branch concept would work, and there were no other customers for banking at 8am, but there was a steady flow for coffee. However, what struck me about Seaport was its similarities to the Ancoats area of Manchester, which was close to this year's BSA Conference. An urban residential renewal of a former industrial area that is being repeated in many of our larger cities here in the UK, not least Hackney Wick, just a stones' throw from our own capital's financial district. If we are to truly engage with our future members, do we need to rethink the locations of our branches, as well as the look, feel, and overall experience?

Overall, Boston was a hugely productive experience. It's not clear to me yet that the urbanised cafe concept nor our simple product ranges would work where our small and regional building societies operate. But it has given me plenty to think about regarding the future of our branches and how we might reinvigorate the branch offering for current and future members.

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