By Kerry O’Leary
Pour-over, cold brew, nitro or drip—the art of brewing coffee has reached new heights in recent years for bean lovers around the world and, in most cities, the coffee shop is as ubiquitous as the corner store. But “café culture” isn’t just for java aficionados; it’s a way of gathering, sharing ideas and doing business that has a long place in history—from 14th-century Turkey to 19th-century Vienna to today’s wifi-enabled spaces and extensive menu options.
Today’s retail experience calls for a special blend of traditional businessand innovative interaction, and for banks, that means getting customers in the lobby but giving them a fresh experience. Richwood Bank—a six-branch, Ohio-based community institution—had that goal after experiencing two consecutive years of five percent declines in lobby traffic.
Richwood Coffee’s uniquely filtered customer experience is a donation-based model that president and CEO Chad L. Hoffman envisioned while on a walk through his local retail mall. Hoffman knew it was time for a remodel, and talks were underway. “There were probably 20 people in line for this very small space, and it was obvious that our lobby could support a coffee shop. So we just started running with it.”
Heather Wirtz, chief development officer and head of Richwood Marketing—the bank’s full-service creative firm that extends marketing strategies and products to its business customers—describes the Richwood Coffee model. “When a visitor comes in, they give to one or more of our nonprofit partners, who have an existing banking relationship with us,” she says. In return, they get a gift card loaded with credits—the currency for the coffee shop. Baristas are trained on accounts and products, helping convert coffee drinkers or community activists into bank customers.
“It’s a win-win for customers since they support a cause they believe in, and a win-win for the bank as far as foot traffic,” says Hoffman. In the first two weeks following Richwood’s second coffee shop in the town of Delaware, nearly $2,000 had been raised. The culture keeps on giving, too. “When you have these nonprofits that are saying ‘go into Richwood Bank and get your coffee,’ you’ve got outside organizations that are actually pushing us as a destination.”
A handshake model for the modern age
Capital One Café—in 12 cities and counting from Denver to West Palm Beach, Fla.—takes a corporate relationship to each institution’s community-based roots with full, independently operated Peet’s Coffee locations branded to the bank and packed with bank amenities.
Visitors are greeted by a “café ambassador,” a roaming digital lifestyle coach who takes orders on an Apple iWatch and serves as a resource for online banking services, product information and all things Capital One. Baristas (Peet’s employees) are responsible for the drinks. Cardholders get a significant discount off their purchase, wifi is free, the baked goods are locally sourced and the community vibe is strong. Meetings rooms can be reserved, no-fee video-teller ATMs line a section of the space and communal tables balance human interaction with digital conveniences.
At its core, the Capital One Café experience brings traditional banking practices like financial advising and community education to new markets—traditional person-to-person interaction with a touch of convenience. “This goes back to creating an experience that fits naturally into our customer’s lives,” says Capital One spokeswoman Stacy Jones. Workshops on topics like talking about finances with your partner, building your savings or how to check your credit report are held in the café. “Our overall goal is to educate visitors and create engagement,” she says.
‘Banking brewed locally’
For HomeTown Bank in Redwood Falls, Minn., the impetus for opening an in-branch café was introducing the bank to new customers. The bank’s Waconia, Minn., branch shares its lobby with local coffee brand Mocha Monkey.
VP and branch manager Michael Orth saw an opportunity when an empty space at a prime intersection became available. Geographically, the building was an ideal site for a new location, but the space was actually too large, he says. “It was about four times the size of our other branches, so what to do with the space was part of the puzzle we needed to put together,” says Orth. The goal for the new branch was to show HomeTown’s culture of people-first. “That’s when [the firm] said it sounded a lot like a coffee shop,’” says Orth.
Waconia was also a totally new market for HomeTown. “We came into a town where we had no presence and no clients, but we had this wildly popular coffee shop that had a huge local following,” says Orth. “And that brought so many people through our doors in an otherwise really difficult industry to get people to walk in and check out a brand new bank.”
HomeTown’s CEO, Dean Toft, has said that the café model will be incorporated into future expansion plans, Orth notes. The Waconia branch is now four years old and has become the $264 million, nine-branch bank’s largest branch in terms of total loans. “Based on the success we’ve had in Waconia, we’d make it a priority to do it this way again, especially with an expansion into a new market,” says Orth. “We just have a constant flow of people here today and it’s really amazing to sit from my office and watch people hanging out in a bank. That’s something I’m not sure I thought I’d ever see.”
Lessons learned
Cafe culture doesn’t work for every financial institution. The insurer MassMutual, for example, last year closed its much-touted Society of Grownups storefront concept targeted at millennials. The hip space functioned as a clubhouse for wine tastings, cooking classes and other social events where younger members could also meet with financial advisers before MassMutual abruptly shut it down, with a spokesman saying “digital channels” were a better way to engage the target audience.
And bankers that have succeeded with the café model have some ideas for best practices, too. For example, Richwood Bank decided not to do any formal marketing for its coffee shop, but customers saw the remodeling process firsthand. The branch never closed during construction. “As a result, we didn’t necessarily get met with positive responses,” says Chad Hoffman. “[The community] couldn’t wrap their minds around what we were trying to do, and we couldn’t really show it to them.” While customers embraced the space once it came to fruition, Hoffman says that formally promoting the concept would have eased the transition pains.
“We told the board we wouldn’t approach a second location until we could prove the results of the flagship, and we were able to do that,” he says. In the flagship’s first two years in operation, the bank has seen a 15 percent increase in lobby traffic. “The community space also introduces the bank to the younger generation,” adds Wirtz. Loans have grown, and the bank has opened more deposit accounts than in previous years.
