Embrace change, take risks, and disrupt yourself

Hosted by top 5 banking and fintech influencer, Jim Marous, Banking Transformed highlights the challenges facing the banking industry. Featuring some of the top minds in business, this podcast explores how financial institutions can prepare for the future of banking.

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Designing a Future-Ready Branch Network

To differentiate product and service offerings going forward, legacy financial institutions must focus on building a distribution network that combines the qualities of human interaction with the power of new technologies.

The design and utilization of physical branch spaces must also be rethought for a future where the efficiency and effectiveness of branches must be maximized.

Our guest on the Banking Transformed podcast is Jeff Klump, President of K4 Architecture + Design. We discuss the transformation of branch banking in an increasingly digital world and how to differentiate the branch experience.

This episode of Banking Transformed is sponsored by K4 Architecture + Design

K4 is full-service design, marketing & branding firm. Their integrated team is made up of Architecture, Interior & Graphic Design, Construction, Marketing and Branding professionals that brand, design, build, and remodel commercial buildings with a particular focus in the financial sector. They are proud to share their financial portfolio, having completed over 2,500 projects over 22 years.

For more information visit k4architecture.com

Jim Marous:
Hello, and welcome to another Banking Transformed Solutions podcast. I'm your host Jim Marous, owner and CEO of The Digital Bank Report and co-publisher of The Financial Brand. To differentiate product and service offerings going forward, legacy financial institutions must focus on building a distribution network that combines the qualities of human interaction with the power of new technologies. The design and utilization of a physical branch, both inside and out, also must be rethought for a future where the efficiency and effectiveness of branches must be maximized.

Jim Marous:
Our guest on the Banking Transformed podcast is Jeff Klump, president of K4 Architecture + Design. We discussed the transformation of branch banking in an increasingly digital world, and how to differentiate your branch experience. In a banking ecosystem that is shifting to digital delivery, it is imperative that legacy financial institutions use data and analytics and modern technology to empower customer facing employees with the tools to personalize customer experiences, and make decisions quickly. It is just as imperative that banks and credit unions reimagine current and new branch designs to reflect the current and changing customer expectations. Before we begin Jeff, can you describe a little bit about your background, and also about K4 Architecture + Design?

Jeff Klump:
Absolutely Jim, and thank you for the opportunity. Jim, K4 is a total solutions provider of design build and marketing branding services. We work with our clients on trying to help them create a strong brand and roll that out, that brand out into their actual facilities. As I said, we're full service. We have an integrated team of architects, interior designers, graphic designer, construction managers, but also marketing and branding specialists. We brand, design, and build commercial facilities with a primary focus upon the financial arena. 78% of our work is in the financial. We do everything from... we're a 22 year old company based out of Cincinnati Ohio. We have seen everything from new branches, to remodels, to repurposes, to additions, to new main offices which we're seeing a lot of right now, and also call centers.

Jim Marous:
It's interesting. 22 years in the business, in financial services, so much has happened. I mean, even the last year with the pandemic and everything, the whole rethinking of what's the branch purpose, how does it fit within the real of everything else with regard to digital transformation. And even though it's a physical branch, you've got to make sure that all these channels really meld together as one. Do you, I mean obviously you do, but in what way do you think bank branches are still necessary?

Jeff Klump:
People still want to deal with people. Banking is still a relationship business. Digital transformation is definitely redefining the banking industry. I started, and I didn't mention that in the beginning, but I was with Fifth Third Bank from 1988 to 1998, for 10 years. And for 10 years, I helped them roll out over 400 branches across the 12 states that they were in. And back then, it was a one-size-fits-all prototype. We built the same branch over and over. Now, we like to say that financial institutions need to really look at the demographic that they're in, and their prototypes or their branches should be a kit of parts that are specific to a specific demographic. Digital transformation is definitely changing the industry, but banking is a... it's a still a relationship business. People still want to deal with people. I mean, we're social beings, and we want a social engagement. And when it comes to the big ticket items like loans or even advice, they want a place to go.

Jeff Klump:
So what we're seeing is that branches are getting, they're getting smaller. Like I said, prototypes Jim for years were four and 5,000 square feet. We've got probably 15 to 18 clients we work with on a prototype basis, and the branches were four and 5,000 square feet. Now those branches have become 2,000 to 2,500 square feet, and staffed with half as many people. The whole universal banker concept is really coming into play. So people can handle the transactions on their mobile phone or on their digital devices, but again, branches, people still want a place to go.

Jim Marous:
So obviously with any architectural engagement, you start by really asking questions of the financial institution, because there's no institutions that are the same. Obviously, if I'm the head of a local credit union, I can't use the same branching strategies that Chase Bank does. I mean, I know in my neighborhood within the last year and a half, they built two, what I'd call 1950s style branches. They're two stories, they're very large. They hold a lot of different functions, but Chase is a different type of organization that uses branches differently. So as part of your interviewing process, what do you ask a financial institution, or how do you dig into each institution's specific needs and the way they're going to be using branches going forward, both on a remodel and a new build basis?

Jeff Klump:
Basically Jim, what we do and what we find is the credit unions, because they're more member focused or more member centric, they like to provide more services at those facilities versus a community bank, the community banks. And the big regional banks, they definitely think differently. They are leaning toward enclosing more and more branches. The community banks and the credit unions are, they're investing in growth. They're putting capital into their facilities.

Jeff Klump:
The pandemic, it's interesting, because a lot of people talk to us about, did the pandemic change the banking industry? And I tell people all the time, I say what's interesting is, what was taking place prior to the pandemic was really a complement to, I hate to say that, but a complement to the pandemic in that it basically, they were already in transition and making changes. And what we do for financial institutions Jim, is we will actually set up with them, we actually send them a questionnaire. So we try to understand what specific things they are looking for for this facility. Then even before we start designing, then we will either do a Zoom call or have a meeting with them, and go through exactly what are your needs and expectations. We try to help them understand the demographic of the markets they're in, so those are some of the steps that we take from an architectural and a design perspective.

Jim Marous:
So, it's interesting. Let's say I'm a mid-sized financial institution. I'm calling you up, and you engage with me. You ask me the questions. Do you also advise organizations where they say, "Okay, we want to build this big branch, traditional branch in a community, this kind of demographics." Do you ask some questions and then guide them in saying, sometimes even steering them in different directions than what they originally thought they wanted to do because of things you've seen in the marketplace, and success that you've seen with some of your branches versus others?

Jeff Klump:
Yes, absolutely Jim. Yeah, we actually just had a meeting a couple weeks ago with a larger financial institution, and they started talking about, it's their main office in one of their major cities, and they were talking about changes to the branch. And I said, "You have all this space. Have you thought about making this space more community centric?" In other words, provide space for the community to use to bring people into your branches and into this facility, and they were actually intrigued by that to the point where one of the officers of the bank took me for a walk, and actually took me over to the local YMCA. And he says, "They have this community space that they are actually leasing to somebody." He goes, "This is a great idea. It's something we hadn't thought about, but we definitely want to explore that." So yeah Jim, we try to take the initiative to give them, and give them direction, of what we're seeing out there.

Jeff Klump:
We also try to talk to them about destination branches. We have a lot of our clients that are looking at the coffee shops. We also want to talk to them about technology and technology branches, and how can you integrate the interactive teller machine to handle that transaction so you don't need the people there to handle the transaction, you've got the universal bankers, or I like to call them the relationship bankers, that are there to build the relationship and strengthen the relationship with the customer or the member.

Jim Marous:
Over the last year, or last three years let's say, more than just a shrinking of the brand size, what are some of the biggest changes you've seen in the way that you're designing branches to basically work within the digital transformation, but also the branch transformation process? What are certain things that you're just seeing, trends that you say, these are going to stick around. This is an ongoing trend rather than just a fad.

Jeff Klump:
Yeah, Jim. A lot of what we struggle with is, when we're meeting with these people, is what is the branch of the future? Where do we go from here? And what we sit people down a lot of times that will approach us and say, "We want to build four or 5,000 square feet," because that's what they know, and as we start talking through it we're like, "Guys you don't need big lobbies. You don't need that traditional teller line."

Jeff Klump:
We actually like to convince them to look at the pod concept or have them look at the concierge stations. If you're going to put in technology like the interactive teller machines, you may want to have a greeter, somebody that can, when a customer or a member comes into the facility, you could take them over and show them how to use the device. And when we kind of talk them through these things and talk about successes that we've seen, they start to listen. And what I have found Jim is a lot of them are very open minded about the suggestions we're making, which is a good thing, because financial institutions need to be willing to change, or risk becoming obsolete.

Jeff Klump:
I actually like one of the quotes Jim you said, it was about a year ago, and you said the financial competitive battlefield is changing drastically, and the change we're seeing now will never happen this slowly again. And I love that, and I actually use that with some of my clients. I tell them what you're seeing now, I've been doing this for 32 years, and the changes I've seen just in the last three to five years are making major impact on these branch facilities.

Jim Marous:
Yeah. And it's interesting. So let's say an organization is calling you just to have an initial touch base, and they're sitting there with let's say eight or nine branches, and they're considering opening a new branch. Would you really look and say, it may be a better deployment of funds to fix the current branch structure, the way that you're using branches currently, as opposed to building a new one? Which is going to be the most effective deployment of funds, if the organization's open to both options? Is it better to really fix the branches that are currently in place, or if they need fixing, or is it better to build a new branch? What's going to have a better impact on customer development?

Jeff Klump:
A lot of times when they meet with us and we talk through it, I tell them, I said, "You guys got to help us understand what direction you're going." I mean, if they want to go into new markets or in a new community, then building a new branch makes sense. But what we try to convince them Jim is that if you're going to build this new branch, let's take the concept that we're building for this new branch, and create that prototype, some of those prototypical elements. Because I like to stress to these financial institutions, your brand is more important to you today than it's ever been if you're in a small community.

Jeff Klump:
And I like to relate it too Jim to the craft beer experience. Young people today, they're very local loyal, but they're also brand centric. I came back from Florida about three weeks ago. In the airport, my kids all made a beeline for Starbucks. I'm like, why are you going to Starbucks? You're paying twice as much, and you're going to wait in line. And they're like, "You know what? We pay..." They love the brand, and they relate to it. And what I try to tell our financial institutions is, when you're thinking about this, I do definitely talk to them about rethinking about how to repurpose their existing branches, Jim. I tell them, we have a client who had a 7,800 square foot lobby. We met with them in-

Jim Marous:
Holy smokes.

Jeff Klump:
Yeah. 7,800 square foot, seven tellers.

Jim Marous:
Turn it into a restaurant.

Jeff Klump:
Yes, yeah. Well actually what we did was they actually turned it into a café bar. He couldn't sell the product but he said, "Hey, I'll take donations and turn this into a community reinvestment," where he put up who they could donate money to. So people would donate money to a specific organization, they'd get so many swipes for a coffee. When the young people came in, they would all go over and sit in a café area, and we had seating for up to 20 people. And it was interesting when we were there Jim, for the ribbon cutting. He said, "Stick around, I want you to see something." And these young people all came in. They sat down, they all got coffee. And he goes, "I got a captured audience." He says, "Jeff, now I'm able to take every one of these young people and they're going to stay with our bank." And they know they can handle everything on their mobile phone or their laptop. It was a great concept, and it's working well for them. We've actually done three other, four other branches that way for them.

Jim Marous:
It's interesting you should bring that up. I was just in Hawaii last week, and I was visiting a bank on behalf of a client of mine. And I come in, and the left hand part of the lobby, it was a headquarters office, which was traditional. The guard stationed and some really interesting art. The right hand side was, I thought it was a Starbucks. It was actually part of the branch, part of the bank. And to your point, they had a restaurant, they had coffee. They actually I believe served Starbucks coffee and also food beyond what Starbucks usually offers.

Jim Marous:
Another interesting concept was not just the table settings and all that. They had what I would call the old fashioned phone booths, where you had somewhat of a vertical setup, a seat, and a closed door, and area for a computer station. They had five of them. And what it enabled somebody to do was to do their work in a quiet scenario. And I thought, wow. This is just so different than what I would've thought from a branch lobby. Oh, and by the way, there was a small area to do banking if you wanted to. So everything's changing so quickly, and I think... I would imagine that there's a tremendous advantage to working with an organization that designs pretty much specifically for banks. Because this evolution, the branches changing so quickly, you've got to stay on top of that. But if somebody was just to hire a local architect, a local designer, that may work really well, but the problem is they don't get the learnings that an organization like yours can provide in a world that, every day that you engage with a new organization, they're coming up with some new ideas, aren't they?

Jeff Klump:
Yes they are, yes. I mean, and you're absolutely right, and we hear that a lot Jim, that a lot of the community banks, because they might have a customer that's an architect, and they will actually bring that architect in and talk to them. But they don't realize the value that's gained by people that are out there every day doing this and working with financial institutions, and to see the broad range of things that... I've been doing this for 32 years, like I said. I was with Fifth Third for 10 years, then I've been doing it as K4 for 22 years, and I've seen it all. I've seen it all, and I'm still learning. That's what's so exciting is I'm still learning, and we're still looking to do it different ways, and that's basically what I try to tell my clients. Think outside the box. Don't be stifled and be afraid of change, because change is, it's inevitable. It's going to happen.

Jeff Klump:
And I like to tell the story about, I'm sure you're very familiar with it Jim, but I don't know if some of your listeners may not be, but like Umpqua Bank and what Ray Davis did with that organization in a 25 year span, he basically converted a sleepy community bank into the largest bank in the state of Oregon, because he thought outside the box. And one of the things he said Jim was play by retail rules rather than banking rules. And so many people, they don't think like that. The gentleman that did the... the president that did the coffee shop, he had a lot of respect for what Ray Davis did, and he introduced me to that book, Leading for Growth. But his focus, Ray Davis's focus was, what are important things to retail? And that's location, marketing, the layout and appearance of your stores. It's customer service, and then bundle sales.

Jim Marous:
Well, and the branch became a real, key element of their brand. I mean, I had the fortune to be able to meet Ray Davis, and talk about a guy that thinks out of the box. I mean, he takes pride, if the industry is going left, he'll go right. Whatever it may be. And the reality is, it's not just to be disruptive. It's to say, "I can't be the same as everybody and be different as an organization." When you're talking about branch transformation right now, what are the biggest trends that you're seeing? What are the things that are happening right now that you see happening that seem to be almost every organization saying, "We need to do this." Because as you've said and I've noticed, there is no model. Unlike a mobile banking model, there's no model that says, here's the way we got to go. It is as different as the leaves on a fall tree. I'm just wondering, what are you seeing right now that almost every organization, or a lot of the organizations you're working with are asking for?

Jeff Klump:
The things that we're seeing is the different delivery models Jim. The integration of the universal banker, or again, I like to call it the relationship banker. I don't even like to call them branches, I like to call them engagement centers. Because these facilities have now become advisory, consultative, education, training. We actually are doing tech bars, and for some people they're like, "I just don't understand that." But the more you sit and explain it, that hey, this digital arena is taking off, and you need to be able to show, your staff needs to train people how to access the digital media. Don't downplay it. Don't make it the enemy. Make it part of your business plan.

Jeff Klump:
And just like interactive teller machines Jim, so many people are reluctant. They say that people come to the branch because they want to deal with somebody, but how many of us right now are saying thank God for drive throughs during COVID? And I had an organization that we work with in Kentucky that integrated about 60 of the ITMs in all their drive throughs. We're actually doing a project for them right now in downtown Lexington, and the CFO right as we were starting the project about four months ago said... he said, "You know..." I asked him about it. I said, "Hey, how did you fare during COVID, and how'd everything go?" He says, "Jeff, pre-COVID we had 70% walk in and 30% people using drive throughs. The people that came to the branches. During COVID," he said, "We got accolades from our customers that they could have a live transaction with a live person via the interactive teller machines." So technology was working for them.

Jeff Klump:
So about four weeks ago at the pre-construction meeting, I pulled him off to the side. I said, "One thing I didn't ask you." I said, "Now that you're back and fully operational," and he goes, "Jeff, it's 50/50." He said, "50% of the people still come into the branch. The other 50 go through the drive through." So 20% of the people were willing to adapt to the change because they were forced into it. So again, sometimes you have to be willing to adapt and change, or risk becoming obsolete.

Jim Marous:
It's interesting, we talked about the branch as a billboard for the brand, and honestly I only go into my branch if I absolutely have to. And I don't need transaction. I've learned how to do transactions outside the branch. And usually, I went to the branch this week because I had a Canadian check and I can't put that in the ATM and have it process the right way, so I came in for a transaction, and I also came in because I had damaged my debit card. And interestingly, I wasn't aware of this, but they printed it onsite. So I had delayed it going, God, I got to call them and get it delivered, and God I hate this process. And I found out that they actually go in the back room and actually print up a brand new one for me, which I didn't know was possible, so that shows I don't know everything in the industry.

Jim Marous:
But when you talk about that billboard, we talk a lot about the interiors. What are you doing as a firm to make it so the exterior actually reflects a brand, and is distinctive enough that a person says they noticed the brand? I mean obviously in my neighborhood, again I'll bring up Chase. That got a corner office, they took over a gas station, they had to dig deep and all that. But they built a two story building that looks just like one in another community nearby that they built a brand new one, but it's really distinctive. It's distinctive at daytime, it's distinctive at night. Obviously the blue lights continue to reflect off the walls of the branch. What have you seen? What are you doing as an organization to make it so the exterior of the branch helps to build recognition, helps to build engagement, and makes it an inviting environment?

Jeff Klump:
I'm glad you brought that up. One of the things that we try to do is we try to tell our clients, create some kind of strong iconic element that you can make that your brand, and that way then if you're repurposing or remodeling another branch, you could take that same iconic element to that facility and people know it's you. We preach this constantly to our clients, and when we develop a prototype, we try to create something like... Jim, it could be an iconic tower. It could be a consistent palette of materials. You touched on it. And I tell people, your buildings are a symbol of your brand, and they should be well lit at night. They should be a beacon to your brand 24 hours a day, seven days a week.

Jeff Klump:
So what we try to tell them is create that strong branded piece, but we also, because we do marketing and branding, we try to convince them, think about your signage. When we do presentations at some of the trade shows, one of the things I really like to do is I like to put up a logo of a company and say, "Who's that?" And I do four or five of them, and then I look at them and look at the audience and I say, "How many of you can say that about your logo? Because your logo is instant recognition if you do it right." And very seldom do any of them raise their hand, Jim.

Jeff Klump:
So the strategy is to create some type of strong, iconic, branded element. Whether it could be a tower, whether it could be a panel, a metal surface with bright colors, a great reflection where then you could put your signage on that. That consistent palette of materials. And again, the other thing that I try to tell my clients, I said your existing branches, think about the curb appeal. Because people want to know that you are still investing in your facilities, investing in the community. Take care of the landscaping. Keep the lighting well lit at night. Make the building pop.

Jim Marous:
Well it's interesting. I'm in Ohio like you, and two organizations that really are very distinctive and recognizable is as I mentioned the blue of a Chase branch, and the way that they... it is blue daytime, it is blue nighttime. They use the lighting in such a way that lets you know, you can be 300, 400 yards down the street and you go, "Oh, that's a Chase branch." Huntington is another one. Huntington with that doggone green. But the reality is, those employees in that company know the Huntington green. It's on doorknobs. It's subtle, but it's very distinctive. And it becomes a beacon to a degree. It may not be the most appealing color in my mind, but the reality is when they converted branches from First Merit to Huntington, I go oh, is that a primer? And then I said oh no, that's not a primer. That's one of their corporate colors. But it becomes part of the brand.

Jim Marous:
On the other hand, my current business bank, it's fairly subtle. I could not right now tell you what their corporate colors are or look at one branch to another and say there's some consistency to it. I mean again, Chase does that really well, there's a lot of consistency even in an old branch to a new branch in the way they use their colors and their designs. So when you're working on this, how much does the branch design and the architecture element play into brand and marketing?

Jeff Klump:
Oh, it's significant Jim. I mean we do it, we actually talk about it both exterior and interior. In other words, I talked about tying your brand to the exterior iconic element, but when you go into the facility, you should be using your brand colors, your brand palette on everything that you do there. We also tell our clients, make connections to the community. Create a community wall, create a history wall. Make connections so the local people see that you're part of that, that you're willing to invest in that community. But brand, it's more important to these organizations than it's ever been.

Jeff Klump:
And we, what we preach constantly is... first thing we'll ask is, do you have a brand standards guideline? And if not, can we help you with that? Because, and interestingly enough Jim, we've... I started out as Klump and Associates Architects back in 1998. I grew... not only did help Fifth Third open them when I was in house, but I helped them open another 400 branches after that. And it was interesting, because they had a one-size-fits-all prototype that they used the same colors everywhere, but it did not relate or tie to their brand. And I preached it constantly, and it was so frustrating, because they were so stifled by hey, this is the way we've always done it and we made money. And it was just frustrating to have to deal with that.

Jeff Klump:
And I left, started the K4 companies. We brought on... like I said, we're started as Klump and Associate Architects, then we brought on an interiors division. We said hey, we really got to help financial institutions create that brand standard on the interior. But then we also brought on a graphics team, so we said we'd got to make connections to the community. So again, that ties and relates to the brand presence in those communities. We actually, in the beginning of next year, we're actually rolling out our K4 marketing and branding division, because a lot of clients have said, who's doing your marketing? Who's doing your social media? We are, we are. Who developed your logo, we did.

Jeff Klump:
And I'd love to tell a story about the logo. As I said Jim, originally we were Klump and Associate Architects and ADCM Construction. And I said, "Guys, we breach brand, but we don't have a brand. We don't have that strong brand presence." So we went on retreat, developed the K4 logo. It was the golden mean with the Fibonacci curve, and K4 was Klump plus four other partners. So about six months after we rolled it out, a friend of mine calls and he says, "Jeff, you either duplicated somebody's logo or somebody stole your logo already." And I said, "Barry, where are you?" He said, "Jeff, we're down in Sarasota Florida." And I said, "Oh you are?" I said, "Are you by chance at the intersection of [Tammyamie 00:30:00] Trails and Clark Road?" And he says, "We are." I said, "Then that's us."

Jeff Klump:
For me, that made the statement that that strong brand and that strong brand presence is what's going to make your organization Jim.

Jim Marous:
So it's interesting. The branch facility and banking in general is moving from a transaction business to an engagement business. The importance of accounts, balances, and transactions is really dropping as it relates to what a person feels about a brand. They expect you to get that right. But when it comes to engagement, the traditional branch back in my day which goes back quite a ways, was a real big separation between the branch managers, the tellers, and the customer. In fact, part of that was the security. It's why branches have windows, is because it helps the security aspect of the branch. What are you doing internally to convert what used to be the teller line, a very, very stifled, even with COVID, even more of the glass based... we've almost gone backwards in time to a degree. But what are you doing with banks that, to really encourage engagement within the physical facility in a way that reflects what the organization as a whole wants to accomplish?

Jeff Klump:
Basically Jim, we call a teller line... we actually had one, a bank president say to me, "Oh, you mean the barrier." He said, "That thing, it almost looks like a barrier." What we do Jim is we really encourage the pod concept, where it's more engaging. It's interesting, because that same president that called it a barrier, when we did the first project for him, he wanted to integrate the pods, but he had board members that were just completely opposed to it. So one of the board members came one day and sat in the branch after it was done, and she went up to his office a couple hours later and said, "I apologize." She goes, "It's amazing how people react differently with this pod concept." They're more engaging, they're more interactive.

Jim Marous:
It's private still. The issue of privacy is even better in the pod concept, yeah.

Jeff Klump:
Correct Jim, yeah. And then even the integration of the ITMs, most of the people we work with put them in their drive throughs, but we've had a number of people actually just make full ITM branches. And the mistake some of them made is they put them in there, but they don't educate their customers or members how to use them, whereas one of the major financial institutions we worked with, we did that, we created an ITM branch, but we put in a concierge station. That concierge would come in and meet with people and take them back, show them how to use the device.

Jeff Klump:
And we really like to show off that branch, so we had another organization we were working with, they came to see the facility, and this was about a year after it was opened. And I said to the young lady at the front counter, I said, "Katie, when you guys opened you would take everybody back and train them how to use the ITMs." And I said, "But now you've been here a year. How many people come to you?" And she said, "Let me pull Heather out of the office and we'll give you an answer." They came back out and they said less than 10%. So people come in, they're reluctant to new technology, they're reluctant to new things. We're creatures of habit. But once you start learning or adapting to that new technology, it's not as difficult as you'd think. So those are things we're seeing, Jim. Pods, concierge stations, interactive teller machines, lobbies smaller.

Jeff Klump:
Offices. Offices, they're not even offices anymore, Jim. There might be a huddle space, or there might be a conference room, but if they do have offices we actually... if we remodel a facility, we pretty much blow out the whole front of the office and make it all glass, so that when people come in, they know that they can go to any one of those people within that branch and they can address their issue or concern. Again, they're the relationship bankers.

Jim Marous:
It's interesting, because when you talk about the whole change of the dynamics of everything from the pods to the office, everything else, that's where a concierge really comes in handy, because that person is multitasked. It may be your old assistant manager of the branch in the old days, or maybe the head teller even. But yet they can still do transactions in most of these concierge locations. Yesterday, the branch manager of the branch I went to was in the concierge location, and it totally looked like it was a plug and play, like a little pod that was added to the branch. Nothing else changed. As we're going forward, and if there's one thing... we're getting into 2022 planning. A lot of people are looking at branches going, what in the world do we do? I mean, the dynamics of what's coming at us, from different opinions on different things and all these new concepts. But if you were to give a recommendation to a bank or a credit union president around what they've got to focus on from a brand perspective, what would it be as they enter 2022?

Jeff Klump:
Well I would basically, the best advice I could give them Jim, is tell them don't be afraid of change. One of the struggles that I have is that so many of them just are so reluctant to change. "This is the way we've always done it, we made money." I told the story about my situation with Fifth Third, and they just, they [crosstalk 00:35:36]-

Jim Marous:
They're as conservative as you're going to get.

Jeff Klump:
Oh yeah, and they had that mentality. And then when George Schaefer came onboard back in 1991, I mean I started in 1988. The first year I built, I built three branches. The second year, I built five. And I thought, "This is not going to be as challenging as I thought it was going to be." And then George came onboard, and he said, "We're going to change." And for the next eight years, I built 30 to 50 branches a year. He grew that organization from a $8 billion organization to $91 billion, because he said you have to change.

Jeff Klump:
One of the other advices that I like to give though Jim is the whole... the thought about ROI, your return on investment, so many in financial institutions make it a... they're so worried about, "I got to get a return on my investment financially." But what they need to really realize Jim is that investment could really make a statement to the communities that they're in. That ROI could be, if you invest, look what it's going to state to the community. You're creating facilities that people are proud to say is my financial institution. It's places where employees are proud to say, "I work there." And to me, the ROI is it could be financial, but you can't always think of it as financial. Investment is a commitment, and financial institutions need to make a commitment to change and investment to growth.

Jeff Klump:
Because people, you don't... and another quick story was, we did a facility for a bank in north central Indiana, and it was their main office Jim. And they struggled, because they were downtown in the community, and they bought land outside. And they were so worried about the message they were going to send to their customers if we move out of downtown. They struggled with it. We went back and forth, we provided proposals, gave them feasibility studies to, "What if you bought two more buildings in the row of buildings downtown?"

Jeff Klump:
And during that whole process, they interviewed a gentleman as their chief information officer. He turned them down both times, Jim. So we get the new facility done and open, their CIO left. The guy that they interviewed two times came in after the grand opening, interviewed for a position, and took it. Accepted the position. And the president said, "What changed your mind?" He looked at him and he said, "You proved to me and to the community that you are here to stay, and you're not setting yourself up to be bought." And he also said, "You made a major investment, which makes a strong statement on the community." That same president, when I saw him at the Indiana Bankers Conference this year, said... he said, "Not only was I able to hire that CIO, I've hired six other people that travel 30 to 40 miles because they like being here. They like the environment they're in."

Jeff Klump:
We did a project up in northern Michigan Jim, and that one, the first one was recruitment, how to recruit key, top people. The second, I call it retention, was we remodeled a branch up in Sault Ste. Marie Michigan, and basically they were really leery about the things we were proposing. They did not understand the pod concept. They had seven drive through lanes, they brought the tubes in and brought them up behind the pods, but they weren't sure about that. After they did it, then COVID hit. Well, what a blessing to have those seven drive through lanes come up, and the people in the branch could service it from their pods. But also, during COVID, some of the older employees decided they didn't want to come back. I saw them this year at one of the conventions and they said, "Something we didn't think about, we posted for three teller positions. All the young people out in the branches want to work in the main office, because it's cool and it's hip." They were willing to change, Jim. They were willing to invest in that change, and it worked wonders for them.

Jim Marous:
So Jeff, how does somebody get in touch with you and your team at K4 Architecture + Design?

Jeff Klump:
Well our website Jim is www.k4architecture.com. We also have an [email protected] They could reach out to us either way. Go to our website, which is k4architecture.com, and then on there is a contact us, an opportunity for a contact us.

Jim Marous:
It's good if nothing else to get a call in to discuss what's going on. Jeff, I really appreciate you being on the show today. It's interesting, I'm not a branch detractor. I'm not necessarily a branch advocate, but it's very clear to me as I see what's going on that the world of bank branches is changing immensely, and that everything organization's got to put their stick in the sand and determine what they're going to become. Some of these things have to be long-term decisions, because we have leases, and we have everything else we have to deal with. But just because you have a long-term lease doesn't mean you have to keep the status quo, and I think that's got to be really understood by financial institutions, that just because you have real estate and just because you have a branch currently doesn't mean you need to keep it the same, and you've got to open your mind to new dynamics.

Jim Marous:
And as we talk about in marketing a lot, we've got to test and learn. There's no one-model-fits-all. If it was, it would make the business a whole lot easier. And the reality is, it may not even be one-size-fits-all between communities within the same organization. So again, Jeff, I appreciate your time and your insight into what's going on in the branch world, and I wish you best of luck.

Jim Marous:
Thanks for listening to Banking Transformed Solutions, a new banking podcast that focuses on innovative solutions for today's financial institution. We'd like to thank K4 Architecture + Design, who sponsored today's show.

Jim Marous:
If you're a solution provider wanting to discuss how you can help banks and credit unions solve a major marketplace challenge, drop me an email or give me a call. I'm keen to help.

Jim Marous:
This has been a production of Evergreen Podcasts. A special thank you to our producer Leah Longbrake, audio engineer Sean Rule-Hoffman, and video producer, Will Pritts. I'm your host, Jim Marous. Until next time remember, branches aren't dead, but they must be reimagined for the future.

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