Will the New Reliance on Caffeine Transform Branches?

Reliance Bank has joined the ranks of retail banks that look to coffee as a means of waking up their branches. Reliance CEO, Rick Sems, told ABA’s Community Banking News, “The banks look like a bomb has kind of gone off and vaporized everybody”. Boosting branch traffic is a big concern for banks that are successfully moving customers to digital tools but rely on the branch to sell products and build brand loyalty. The question is: “Will customers, intent on a caffeinated refresher, will be interest in learning about financial services?” In the late 1990’s, ING began opening Direct Cafés whose Barista-bankers personified the maverick brand, providing a reassuringly physical manifestation of a ‘virtual-bank’ at a time when most financial transactions were done in person. At around the same time, in-branch Starbucks kiosks began appearing in B of A and Wells Fargo lobbies as completely separate elements; requiring customers to complete one journey before starting the other. The ING model was so successful that Capital One built 4 more cafés in Boston after acquiring INGD’s US franchise, while the B of A and Wells formats never got much traction. Despite these negative results, the concept continues to be popular with bankers, last May GECU partnered with local provider, Kinley’s House Coffee & Tea, to open a hybrid in which the bank occupies a mezzanine above the café. However, the jury is still out on the efficacy of selling DDAs to customers who come in for lattes, banks that haven’t struck a deal with a coffee purveyor should tread carefully. What worked well for an offbeat, virtual-bank brand in the... read more

Two Insurers are Cracking the Millennial Code

For most financial institutions connecting millennials is an uphill battle. Not so for two innovative insurance companies. State Farm opened its Next-Door financial coaching/café in 2011 as an entrepreneurial incubator where people could get financial coaching and have a latte while creating their dream business. MassMutual’s Society of Grownups opened in late 2014, in Brookline, Mass, to help young adults build a better financial future. Both locations have an informal, hipster friendly atmosphere and differ from most financial education plays by not being deathly dull. The Society of Grownups holds supper clubs and Happy Hours that couch financial advice in a familiar congenial setting charging participants $30-$40 per event, while Next Door builds on the alternative workspace model with whiteboards, floor to ceiling chalkboards and yoga classes along with free lectures and coaching. There are no financial products for sale in either concept. These are living labs for the sponsoring institutions and the ROI comes in the form of a peek at the millennial psyche. One visit to either location is enough to see why these venues beat the heck out of sitting across from a banker in a pre-fab... read more

Disintermediation Goes Mobile

According to the Wall Street Journal  “advertisers in the future will pinpoint the exact moments and needs that users have—entertainment, retail searches, even sports scores—and supply consumers with the solutions they are looking for in real time”. The article goes on to describe how integrated devices and apps will present consumers with an instantaneous, seamless path from awareness to purchase. This will have enormous implications for retailing in general, and retail banking in particular. Faced with a steady stream of appealing offers that are both timely and relevant; consumers’ emotional loyalty to brands could be supplanted by a more practical assessment of the brand’s reputation for product quality and utility. This development may not be a big obstacle for retailers like Apple, Nike and Ann Taylor, who rely on product design and cache to bond with customers. But it could be bad news for banks whose customers don’t see much daylight between bank brands and banking products on a practical level. Original WSJ... read more