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Banks Look to Cash In by Providing Personal Touches

August 23, 2004|Rukmini Callimachi | Associated Press

There are no velvet ropes or marble teller's counter, no dark wood or imposing glass panels. Instead, the interior of the bank has the feel of a sleek living room -- hip leather chairs flank a plasma TV screen, with a shelf of bestsellers nearby.

The bank offers more than just cozy decor -- customers can sign up for yoga class and movie night.

"What if we felt like home?" asked Umpqua Bank's chief executive, Ray Davis. It's the Oregon bank's latest advertising line, emblazoned on billboards and the sides of buses.

But the trend can be seen everywhere, particularly in California.

Community banks are creating a niche for themselves by giving customers an environment that invites them to linger. Financial giants have been weaning customers off human contact with automated teller machines and Internet banking -- leaving an opening for small and mid-sized banks to go for the personal touch.

"It's part of a trend in business which tries to make transactions an experience, rather than just a transaction," said Charlotte Birch, spokeswoman for Washington-based American Bankers Assn.

Keeping kids entertained is another strategy small banks use.

In El Segundo, Hawthorne Savings, which was recently acquired by Commercial Capital Bank, rewards children with toys when they deposit money into savings accounts.

The personal-touch trend has had enough of an effect that bigger banks are rethinking their strategies.

"A checking account is a checking account is a checking account," said Laura Schulte, Wells Fargo & Co.'s regional president. "The only way to differentiate yourself is through service."

In California, Wells Fargo and Bank of America Corp. have signed contracts with Starbucks Corp. to operate a coffee shop inside select branches. BofA is also testing a mini-bank where children can "play teller," said Amy Brady, the bank's innovation and development executive. Children can also use a computer terminal to log on to and entertain themselves while their parents bank.

At Washington Mutual Inc., a "teller action doll" is given to customers at special promotions.

"It's the teller as superhero -- it's a way of drawing attention to our unique style of banking," said Mary Kelley, Washington Mutual's senior vice president of corporate communications.

Washington Mutual has a play area for children as well as a concierge desk.

The trend has also caught the attention of international players. ING Direct, part of Amsterdam-based ING, has three "cafes" in offices -- including one in Los Angeles. The tellers play the role of barista, said spokeswoman Ashlee Stokes.

Portland, Ore.-based Umpqua Bank is trying to stay personal even as its assets have swelled from $140 million a decade ago to nearly $3 billion. It has 64 branches and recently announced plans to expand into Washington and California.

Founded in 1953 by loggers who were fed up with driving long distances to cash their checks, the bank has always targeted customers who have felt ignored by larger institutions.

In 1996, newly hired CEO Ray Davis changed the bank's atmosphere. Branches began serving coffee -- not just a pot of generic brew, but the company's own blend.

By inviting customers to linger, Davis borrowed a core concept of the retail industry.

"There is a direct relationship between the time spent in a store and the average amount that you buy," said Dan Stanek, executive vice president of Retail Forward, a retail research and analysis firm in Columbus, Ohio.

Bob Schmermund, executive director of Washington-based America's Community Bankers, said in banking that focus translated into more services sold.

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