la Frontera In the News

Austin American-Statesman

January 4, 2004

Banks lobbying hard for customers' business

Branches renovating, redesigning to pitch an array of services

by Claudia Grisales, American-Statesman Staff

Remember the days when big banks wanted you to take your business to an ATM, the phone or a Web site instead of their lobbies?

Well, those days are gone. Central Texas banks are spending millions of dollars on makeovers they hope will draw customers back in. Call it savvy eye for the boring bank.

"When you think about walking into a bank anywhere, it's always the same: a long line of tellers, desks in a common area, people talking and pretending to be busy, and the wall of glass offices with miniblinds," said Mark McGarrah, a partner with Austin consumer-branding firm McGarrah/Jessee, which helped Frost Bank rethink its approach to branch offices.

"This model was designed to change all that," McGarrah said of the new Frost Bank branch in La Frontera shopping center at FM 1325 and Interstate 35 in Round Rock. Offices and workers' desks now are out of sight, replaced by customer-friendly amenities, such as a help desk and common areas. The new layout has more in common with a hotel lobby than a traditional bank.

So far, the bank has two branches such as this one. The other is in San Antonio.

Banks are facing a growing set of challenges: increased competition from traditional rivals, credit unions and Web-only lenders; decreased customer loyalty after several rounds of mergers; and more comparison shopping made possible by the Internet.

Add to the mix a growing number of products to sell in Texas, such as home equity lines of credit, and bankers have their work cut out for them.

"It's become a hot-button issue, particularly for the large regional banks that want to expand their retail-banking efforts and focus on gathering deposits and cross-selling products to customers," said Brett Rabatin, a research analyst who follows the banking industry for FTN Midwest Research.

"I wouldn't say banks pushed their customers out of their lobby, but they have had a more customer-service-oriented business than before."

Aiming to stand out

Customer service starts with the lobby, the bank's public face. At Frost Bank's new branch in Round Rock, customers will enter a greeter station with a Texas flag shown waving on a 42-inch plasma television. A personal banker, with a wireless laptop in hand, can direct customers to a teller or handle their financial questions.

Customers also can spend time in the bank's "Frost Room," which features a soaring, 21-foot ceiling, furnished with leather sofas and chairs, television tuned to news, built-in bookshelves with library and Texas memorabilia, and a bar-height table with two flat-screen computers.

McGarrah pitched the idea of redesigning Frost's lobby in 1999 with the hopes of making the bank stand out from its competitors. Two years later, Frost began work on its new prototype, hiring McGarrah, architectural firm Cottam Hargrave of Austin and a San Antonio-based interior designer.

It also commissioned Central Texas photographer Robb Kendrick to take photos across the state to hang in the bank's lobby. Along with reproductions of an 1836 Texas map and an 8-foot-long reproduction of a giant money-printing plate, the bank is accented with metal, aluminum and glass surfaces.

Competition heats up

Competitors Bank One, Bank of America, Wells Fargo and others are introducing new designs as well, upgrading current branches and opening new locations.

This week, Wells Fargo installed online banking stations at 25 of its branches.

Bank of America plans to open eight new branches this year at a cost of $3.5 million each.

Bank One, the region's third-largest bank in terms of deposits, is spending $1.5 million to remodel its branches in the Austin area as part of an effort to regain lost market share and win new business.

Bank One employees are donning new Land's End uniforms; and new branches are getting drive-through lanes with two-way video monitors that allow customers to see the tellers, as well as hear them. (A DVD setup also allows the bank to provide entertainment and promote new products to customers.) Other changes include putting greeters out front and installing a sleek new logo.

The bank also is paying closer attention to individual customers to keep them from going to a competitor.

"A couple of years ago (when a customer closed an account), we may have said, 'Thank you and have a nice day,' " said Chris Spencer, a regional spokesman for Chicago-based Bank One.

"Our mindset has changed now: We'll ask them, 'wait a minute, why are you closing your account?' " and offer to enroll them in a better account with fewer fees, or tell them about our gift certificates to retail partners, such as Target.

And no customer is too young. At the bank's branch at La Frontera, the children's area is equipped with coloring books, Etch A Sketches and Rubik's Cubes. "We want to reach out to our customers, to explore and update their financial profile so that we know what kinds of accounts are best suited for them and, along the way, uncover their other financial needs," Spencer said.

Few frequent lobbies

But banks face an uphill battle trying to recondition customers to frequent their lobbies: Only about three out of every 10 customers visits a bank once a week or more, while the vast majority go in once a month, according to a Gallup poll reported by the Washington Times.

At Bank of America, the largest Central Texas bank in terms of deposits last year, the redesign is part of an aggressive growth plan. It expects to add 550 branches nationally in high-growth areas such as Texas. By the end of 2004, it plans to increase the number of locations to 48 in Central Texas, a jump of 50 percent in two years.

Customers who walk into a new Bank of America branch are greeted at the front by a host on what's known as the bank's "main sales floor."

Bank of America's makeover goes beyond aesthetics. The bank also is trying to change employee behavior. In 2001, it hired a Walt Disney consultant to introduce a new "Bank of America spirit" campaign, which trained employees to the intricacies of being "onstage" when working with customers and "offstage" when on break in the back room.

A theme park and a bank lobby aren't so far apart.

"If someone sees Mickey smoking a cigarette by a vending machine, there's a disconnect," said Brent Millican, a senior vice president for the Austin region.

Being 'onstage'

So employees are encouraged to keep personal conversations to their "offstage" area, which includes a break room and personal desks.

Desks in the "onstage" area are kept bare, with no personal photos or mementos belonging to associates.

"We work really hard with our Bank of America spirit," Millican said. "We're really all part of this production. We are trying to create a relationship. Every transaction is an opportunity to develop an emotional and personal relationship."

That's the key to keeping customers such as Roger Gastineau, a Bastrop-area resident, and winning new ones.

Gastineau, who stopped at the new Bank of America on Stassney Lane to take care of a checking account matter, was almost out the door before he noticed the new design. It's the service that will keep him coming back.

"I don't look at that stuff," he said of the decor. "I just want to do my banking -- get in and get out."