October 28, 2004

Unable to see their own branches in the same way that their customers do, bankers have become "store-blind," according to Paul Olivier, group executive vice president, consumer banking, for San Antonio, Texas-based Frost Bank. After all, they may not like what they see.

The classic bank branch presents the uninspiring sight of tellers locked behind a protective enclosure; platform employees chained to their desks; the manager sequestered in a glass-walled office with the blinds closed; and a meager waiting area with two-month-old magazines and brochures about interest rates. After interrupting someone to get service, the customer is eventually invited to sit among the clutter of bulging three-ring binders bursting with compliance procedures.

"We became collectively unaware of what we were doing and the environment we were creating," Olivier says. "It's clearly inhospitable."

Frost Bank ($10 billion in assets) responded by changing the "choreography" of its branch environment with the help of NewGround (Manchester, Mo.), a bank design, construction and marketing firm. Now, "You are immediately greeted by a concierge counter," Olivier relates. "It's more like a registration desk at a very upscale hotel."

With customers often coming in simply to cash a check at the teller (now discreetly located in the back of the branch), the presence of a concierge gives the bank a chance to create a more lasting bond with its regular visitors. "Even if it's only been small talk for the past six months, there's the foundation for a relationship that's being made," Olivier says.

Another chance to form a relationship comes by introducing customers to technology. "With the advent of self-service through the Internet, the next-generation customers can take care of themselves extraordinarily well," Olivier notes. "Your branch has to be set up to acknowledge the existence, the importance and the relevance of the Internet."

Frost Bank provides full-service Internet terminals for its customers along with in-person help when needed. "We don't just point someone over to a phone or a computer," Olivier says. "We educate them and lead them through the process."

For more consultative financial services, the concierge shows the customer to an amenity-laden waiting room replete with fresh coffee, cable television and today's paper. When a banker becomes available, the customer is brought to a private conference room where the phone doesn't ring and there are no wayward piles of paper. The banker uses a wireless-equipped laptop computer to work with the customer on service options.

The shift to concierge-based retail banking has helped Frost Bank differentiate itself in the increasingly crowded Texas marketplace. Furthermore, the bank has prepared itself for a technology-enabled shift in consumer behavior. "The branch is going to go from a transaction center into a selling spot where you go to buy financial services," says Olivier. "The designs that we put in place make more sense than what took place in the past."