The Umpqua Store
Wendel’s note: Ric Carey managed the Community Banking/Retail Banking Branch network at Umpqua from 2003 to early 2011 and during that time played an essential role in transforming the bank. Ric obviously knows in great depth how to create and implement a differentiated delivery model. However, all of the material discussed in these newsletters is public information available from presentations made at conferences, CEO Ray Davis’s book, and various other bank related events.
Umpqua Bank has long been recognized as an industry leader in retail banking, growing from six offices and $140MM in deposits in 1994 to over 185 offices and $11BB in 2012. This growth has been achieved through a combination of innovative branch design, creating a superior service quality culture, employing a customer centric staffing model, and implementing unique marketing strategies.
The goal of Umpqua’s management team as well as every associate both then and now was to remain a Community Bank in spirit no matter its total size. The bank achieved significant growth while also providing an extremely attractive working environment (listed four years in a row as one of the top 100 companies to work for by Forbes Magazine) and achieving high service quality rankings from its customers.
In this and our next newsletter, we outline some of the tactics and strategies that several successful community banks as well as Umpqua implemented to achieve unparalleled growth and recognition around the globe. By the way, to this day, each month banks from around the world visit Umpqua to try and learn its secret to success. Of course, Ric has also assisted several banks in understanding and adapting to a unique branch delivery strategy.
Focus on branch design.
* Neighborhood store vs. traditional branch model: Much has been publicized around the evolution of Umpqua’s branches, which the bank refers to as “stores”. As most banks were either reducing branch service in an attempt to force customers to use ATMs and online banking or continuing to build large full service branches, Umpqua chose to re-invent its store design to feature what the team called the Neighborhood Store. These stores offered an inviting environment which offered a welcoming, comfortable open space plan to bring customers into the space to enjoy a newspaper, business TV station, Internet café, the bank’s own brand of coffee and, yes, do some banking. “Read, Sip, Surf, and Bank” was born.
The placement of the neighborhood store is of primary importance. Management focused on urban communities where small retail, local restaurants, and concentrated housing provided a sense of community living. Each store featured amenities to attract local residents to come in, relax, gather information about current events within the community, and also bank. This formula resulted in each new neighborhood store providing significant deposit and loan growth within the first year of operation.
When you enter an Umpqua store, you will not find a desk in the main banking area. Instead account opening rooms are hidden from customer view to offer privacy and security. Interactive touch screen technology was implemented not only to provide product information, but more importantly to offer the community a place to post electronic notices, local pictures, and information on important community meetings. Internet cafés are a primary fixture within these stores, offering a safe and relaxing area to conduct online activity.
* Remove backroom operations: Umpqua removed all backroom operations from its stores so that the bank’s Universal Associates could concentrate on providing exceptional customer service. This included overdraft processing, unpost item correction (entries that will not post for some reason such as wrong account number, torn check, etc.), returned item processing, cash balancing, consumer and small business loan processing, etc.
* Leverage branch technology: The effective use of technology has also proven to be a critical differentiator:
— Teller cash recyclers: Teller cash recyclers are now utilized within all new stores to improve cash handling efficiencies, cash balancing and security. For those who do not know, teller cash recyclers are new equipment that supports one to three tellers. With a recycler, tellers have no cash drawer. Instead, cash is fed into the recycler where it is counted, sorted and counterfeit protected. When cash is needed for a customer, the teller inputs the amount into a computer, and the cash is automatically dispensed in the proper denomination. This equipment improves cash balancing, reduces cash handling errors, and deters robberies.
— Touch screen technology for product and community information: Touch screens are now a fixture in all new stores. They serve several functions including bank product information (which has eliminated the need for paper brochures) and also provide a community billboard for highlighting community activities.
— Internet café: Each store features a comfortable workstation area for customers to surf the Internet and enjoy a cup of Umpqua brand coffee in a safe and relaxing environment.
— Large scale video: Several locations now offer large video monitors that provide presentation support for functions such as community board meetings, special events and even the occasional Wii bowling tournament for senior citizens. These “non-bank” activities draw customers and prospects into the store and demonstrate the bank’s commitment to its surrounding community.
— Video conference technology for access to product experts: Umpqua realized that it could not afford to provide product expertise at every location. Therefore, it introduced special video conference technology in its account opening rooms to provide immediate access to product experts in the areas of mortgage lending, investment banking, and small business lending.
Remain a community bank no matter its total size.
Some of the factors making this corporate philosophy a reality include:
* Connect program: The connect program is a way of promoting staff volunteerism throughout the organization. Each year Umpqua allowed 40 hours of time away from the branch, during the work day, to participate in approved community activities. The activity was required to meet certain criteria and the organization and the date and time of the absences required the branch manager’s approval. With youth and education a focus, many staff volunteered at their son’s, grandson’s, daughter’s or granddaughter’s schools. Many participated in SMART (Start Making A Reader Today), reading with first and second graders to improve reading skills. Many other activities were approved such as Habitat for Humanity, local food banks, etc.
The goal was to have 95% of Umpqua’s staff involved and each year over 30,000 hours were spent on volunteerism. This program was put in place throughout the Umpqua branch system without impacting staffing levels. Most of the volunteer hours were spent during mid week, mid day times that normally found the branch slow and able to operate with someone missing for a few hours. Those that completed 40 hours were celebrated with awards and bank wide recognition. The bank never chose to toot our own horn about the program, although publicly it was mentioned at virtually every grand-opening or community event.
* Community wall: Every new store features an area where community organizations can post events, surveys or just pictures of the community and its residents. Additionally, local businesses can place their business information for local residents to view.
* Creating the Community Hub: Umpqua’s goal was to become the place where local residents gathered information about their community, held special events supporting the local community, and became a special partner in support of the community.
IN OUR NEXT newsletter we will discuss marketing strategies, the staffing model, approaches to service quality, employee recognition and empowerment activities, and the results of all these efforts. We will also discuss how we can assist banks wanting to know more about creating a differentiated branch delivery strategy and adapting these and other approaches to their own bank.