Umpqua Bank: Upending Banking

By Karen Kroll

In many retail environments, an enriched customer experience has become the norm. Sophisticated consumers wouldn’t be surprised by, say, a bookstore hosting a magician whose shows are geared to the preschool set, or a coffee shop offering free Wi-Fi and comfy chairs. Even brewpubs hosting yoga classes no longer raise eyebrows.

But it’s not often a financial institution offers such extras. Umpqua Bank does. This Oregon-based bank boasts about 300 locations and nearly $25 billion in assets. That’s fairly impressive until you realize those numbers are up from a half-dozen locations and about $190 million in assets as recently as the mid-1990s. Then it becomes kind of mind-blowing.

What does it take to turn a small-town community bank into powerhouse innovator that’s beloved by its customers and envied by its competitors? If there’s a recipe for that kind of success, we’d all do well to know what it is. So we gave them a call.

Much of the credit belongs to Ray Davis, the chief executive officer who joined the company in 1994, says Eve Callahan, who oversees the customer experience with Umpqua. Davis recognized banks would have to change to counter the trend toward ATMs and other technologies that could soon make heading to the local bank branch as obsolete as running to the video store to rent a movie.

Davis focused on “creating a different kind of banking experience,” Callahan told us. Finances can be a scary topic for many people. Few of us can be sure we have all the money we’ll ever need, so managing what we do have is critical. Yet, financial products often are complicated.

Banks themselves can be intimidating. “They’re large, imposing buildings with marble columns. They don’t say ‘come on in,’” Callahan said.

No longer a chore.

To offer a different experience, Umpqua’s management team looked at retailers and hospitality companies known for making clients feel welcome. The goal was to “transform banking from an unpleasant chore to something people want to do, Callahan said.

Umpqua calls its locations “stores,” rather than branches. Many people walking into an Umpqua location wouldn’t immediately recognize it’s a bank. They can pour themselves coffee—Umpqua even boasts a proprietary blend—or tea, and settle into comfy armchairs and work from their laptops. Many locations offer meeting places both customers and non-customers can reserve.  

The only indication the facility houses a bank might be the displays along the walls that contain brochures and information on financial products. The idea is to quietly let visitors and customers know that when they’re ready to have a conversation about finances, they can turn to Umpqua.

Each location also houses a silver phone that dials the desk of the chief executive officer. “We have a line of communication that’s open to the top,” Callahan said, adding that customers do use them. Most call either to praise a staff member, or because they don’t believe they’ll actually reach the CEO. A few, of course, are from customers frustrated by a particular issue. “Those calls are important,” she said. “We’ll find a feature or process that’s not working as well as we’d like.”

The stores’ look and feel help to physically define how Umpqua wants to be present in the community. “They’re designed to be gathering places,” Callahan said. “They’re what community banks used to be.”

A customer-focused culture.

While critical, the stores’ physical design is only the start. What happens outside those four walls is also important. Every Umpqua employee receives forty hours of paid time off to volunteer. In 2015, two-thirds of the bank’s associates volunteered more than 52,000 hours. Their efforts “show a genuine commitment to the communities Umpqua serves,” Callahan said.

“I describe Umpqua as an all-in partner that’s really engaged with us and our mission,” explained Jason Clark, executive director with Second Harvest, a hunger-relief network operating in eastern Washington State and northern Idaho. Last year, approximately 100 Umpqua employees donated their time to the organization.

Several years ago, the Umpqua Foundation provided Second Harvest a $300,000 grant, distributed over three years. “It was a big vote of confidence to have a credible organization like Umpqua say, ‘We believe in this organization and their work.’”

Umpqua challenged Second Harvest to think about how it could make a bigger difference in the communities it serves. For instance, Second Harvest works with three schools in which many students come from families with lower incomes. That provides three environments in which to test different approaches.

When Second Harvest sent a mobile food truck several evenings each month to one elementary school but failed to achieve the participation it expected, it collected feedback. Clark and his colleagues learned that because the school isn’t pedestrian-friendly, most students ride the bus or are driven by their parents. It’s often not practical for them to return to school later in the day.

With this in mind, Second Harvest forged partnerships with several apartment complexes near the school, and sent its truck there. “This allowed us to provide more food to more families,” Clark said.

In addition to Umpqua’s charitable efforts, each store manager is “charged with knowing the community,” Callahan said. Along with yoga classes and movie nights, some rural stores have events in which local children showcase their farm animals. The Catalyst Series in San Francisco features such speakers as a co-founder of funding site IndieGoGo. “We empower stores to do what they think will add the most to the community,” she added.

Given Umpqua’s unconventional approach, it’s not surprising the bank looks for job candidates who are “passionate about service,” Callahan said. “We know we can teach banking.”

The approach appears to be working. The company’s net income rose from $102 million in 2012 to $233 million in 2013.

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