The Tiny Bank: A Growing Phenomenon?

By Karen Kroll

You might have heard of the “tiny house movement”—an effort to save money and resources by significantly downsizing the housing we have available. What would that concept look like applied to bank branches? In July, PNC Bank opened its portable “Tiny Branch” on the campus of West Virginia University in Morgantown, West Virginia. The peripatetic structure, just 160 square feet, launched in Atlanta several years ago, said Brian Halloran, head of retail transformation with PNC. From there, it moved to Millennium Park in Chicago, and then to downtown Charlotte, North Carolina, before landing in Morgantown.

A catalyst for the tiny branch was PNC’s acquisition of the North American network of Royal Bank of Canada. With the purchase, PNC was moving into new markets that held a great deal of opportunity, yet had relatively few existing branches, Halloran said. While PNC constructed some brick-and-mortar branches, it scaled back the number it might have built ten or twenty years ago. More than half—56%—of PNC customers use non-branch channels, like ATM and mobile solutions, for the majority of their transactions. That’s up from 38% three years ago, the bank reports.

At the same time, PNC wanted to secure a robust presence in the new market. That led to the idea of building a smaller, colorful, and mobile pop-up branch that could be placed in areas customers frequented on a daily basis. Halloran and his team found a company that built pop-up entities, and placed the branch at Atlantic Station, a popular mixed-use site on the brownfield site of the former Atlantic Steel Mill. It boosted consumer awareness of PNC in the new market and led to customer acquisitions, he says.

“We tend to put the tiny branch where we’ll get the most exposure, and in areas where we can talk with customers we’d like to attract and retain,” Halloran said. In a downtown area, that’s often in areas near offices of working professionals.

When people first walk by the tiny branch, they’re usually intrigued, Halloran said. They know the pop-up wasn’t there before, and want to know more about it.

The employees staffing the tiny branch are more than happy to help them out. PNC typically pulls a few employees from nearby brick-and-mortar branches to man the tiny branch, including members of the branch sales team. They’ll often complement these individuals with members of the bank’s “experiential team” of bankers. These individuals head to concerts, sporting, and philanthropic events to talk with people and “build the brand outside the four walls of the branch,” Halloran said. Most are outgoing and comfortable building relationships with complete strangers, he added.

As long as the weather cooperates, the employees remain outside the actual walls of the bank, so they can engage with people as they walk by. They’ll ask about their banking needs and show how PNC can partner with them.

Employees at the tiny branch can use iPads to open deposit accounts, refer customers to mortgage, insurance, investment and other products, and demonstrate solutions like PNC Virtual Wallet for consumers, and the bank’s Cash Flow Insight for small business owners. Inside, the tiny branch has the same technical capabilities available at most brick-and-mortar branches.

Getting ready.

Before all that can happen, PNC needs to ensure the tiny branch complies with all local regulations and ordinances, and that it has secured the proper permits. For instance, the permitting process at some locations governs graphics and logos. “As a result, we’ve had to treat them differently on some occasions,” said Joseph Balaban, PNC spokesperson.

Another critical factor in selecting and preparing a location is access to power, Halloran said. The tiny branch isn’t able to run just off a generator. PNC works with the local utility to ensure a reliable source of power.

Weather also is a consideration, given that many employees assigned to the tiny branch spend much of their time outside of it. Over the winter months, PNC would locate the branch in regions of the country likely to have milder temperatures.

As with any bank branch, security is a concern. No cash is stored at the tiny branch, other than within the ATM. Any transactions that involve cash are done through the ATM, Halloran said. The tiny branch is outfitted with multiple security tools, he added.

Now that the tiny branch has made it to its fourth location, the preparation is smoother. “Every time we do this, we learn more and get better,” Halloran said. “We move from idea to install faster.”

To be sure, traditional branches remain a tremendous branding opportunity. “You can’t get much bigger than a physical branch on the corner,” Halloran says. Yet, the tiny branch can be a cost-effective complement to brick-and-mortar locations, and another way for customers to interact with PNC.

PNC is considering creating more tiny branches, although it has not made any final decisions, Halloran said. “It really does help from a marketing and awareness standpoint,” he says. “We show up bigger than we really are.”

Karen M. Kroll is a business and financial services writer and content marketer based in Minneapolis-St. Paul. Email: [email protected].