B. Michael Rauh
May 9, 2022
Chelsea Groton Bank reinvents branches, hosts classes to attract in-person visits, boost business
PHOTO | CONTRIBUTED
A class gathers at a Chelsea Groton Bank branch, where courses are offered on topics ranging from financial planning and business development to cooking.
By Michelle Tuccitto Sullo, New Haven Biz
It’s a conundrum facing banks around the country and world — with fewer people visiting branches to do in-person banking, what should be done with all that underused real estate?
Many banking chains have closed branches as consumers have migrated to more online banking. But a Connecticut bank has come up with a different strategy that its leaders say is working.
B. Michael Rauh, president and CEO of Chelsea Groton Bank (CGB), said customers still view branches as important, but aren’t using them as often due to the convenience of electronic transactions.
CGB started researching what other banks are doing, and discovered many have opted to have smaller, fewer or more automated branches.
Between 2008 and 2020, more than 13,000 bank branches closed across the United States, or about 14% of branches, according to the National Community Reinvestment Coalition, based in Washington, D.C.
In Connecticut, banks closed 16% (or 211) of their branches during that same time period, Federal Deposit Insurance Corp. data shows.
While closing branches might curb costs, it doesn’t generate business, Rauh notes.
“We looked at it more like a retailer and said, if we are running a retail store and there is a shelf full of things that people aren’t buying anymore, what can we put on that shelf that somebody would buy?” Rauh said.
CGB leaders noticed that retailers such as Apple, Verizon or Williams Sonoma are often packed with people.
“What were [customers] going in for? To learn to use a device or cooking tools or to get more out of your phone,” Rauh said. “Each of those places still has transactions, but the meat of what they offer is this opportunity to learn and grow and share.”
It was a eureka moment, and CGB started applying this strategy to its own business.
“We started to think about — could the branch be a place more about learning, sharing and growing?” Rauh said. “Instead of cutting expenses, we decided to look at generating more revenue, creating a space people want to come to.”
Today, CGB branches host a variety of classes and get-togethers on a range of topics. In 2021, the bank hosted approximately 236 classes.
It has a “Chelsea University” and teaches students about savings and investments, including buying a first home, preparing for retirement, or saving for college.
Teenagers come to learn about writing checks and online banking. Classes cover preparing for health crises and becoming an elderly parent’s caregiver. A class focuses on legal and financial planning related to Alzheimer’s disease. There are sessions on using banking tools, such as setting up automatic transfers, and how to reduce the risk of fraud and identity theft.
The bank also hosts classes for entrepreneurs on creating marketing plans, starting and maintaining a business, tax planning and reporting, record keeping, cash flow and social media marketing.
They also have non-financial classes and events, such as book clubs, book signings and “Coffee with the Cops,” where residents can meet local police officers. Cooking classes, massage fairs, document shredding and dog adoption events have also taken place at branches.
“We are actually seeing people come into the branches that we wouldn’t normally see just to come in and cash a check,” Rauh said. “They will come in to learn about buying a first home or how to take care of an aging parent or how to make Christmas cookies. We have a wide variety of programming aimed at different segments of the market.”
CGB rents out larger spaces to accommodate the most popular classes, and also will go to business customers to provide programming at their facilities. It also offers virtual classes.
Re-imagined spaces
To shift from the traditional transactional bank to branches conducive to classes and gathering spaces, CGB’s offices have needed a makeover.
The Groton-headquartered bank has 14 branches throughout New London County and a loan production office in Hartford County.
CGB worked with designers and architects to start overhauling its branches to be more appropriate for classes and conversations.
Rather than a wall of tellers, the physical spaces are being redesigned to be more comfortable and home-like, with spaces that can be converted easily to have theater or classroom seating, depending on the needs for a particular event.
The redesign still includes spaces where customers can meet for private conversations. There are videoconferencing areas so the bank can easily bring in outside experts.
Lori Dufficy
Lori Dufficy, CGB’s executive vice president, chief experience and engagement officer, said they have completed three bank branch “reinventions,” a term she uses because it is more than a remodel, but a change in what is being offered too. The first branch reinvention was finished two years ago.
A fourth branch upgrade is expected to be finished in mid-May. Three more will be done later this year, with the remaining branches to be upgraded by 2024, Dufficy said.
Even teller interactions have been redesigned to be more approachable, without big barriers between customers and bankers, she said.
Rauh declined to comment on the cost of the physical branch makeovers. He does, however, believe the changes have led to new business.
“In all of the places that we have done the reinvention, we see the benefits of the newly-created spaces in terms of deeper, longer, more meaningful conversations with customers,” Rauh said.
That has translated to new accounts and relationships, and referrals for commercial loans and wealth management, he said.
“The metrics that we use to determine success are all still the same, we are generating business in a slightly different way,” Rauh said.
CGB saw its overall assets increase 10.1% in 2021 to $1.59 billion, while its deposit base grew 16.7% to $1.3 billion, according to its annual report.
Its 2021 net income was $17.4 million, up 33.3% from a year earlier, according to its annual report.
A fresh focus
According to Rauh, Chelsea Groton Bank’s reinvention, and the level of focus it has on hosting in-branch events, seems to be unusual for the banking industry.
“We haven’t seen anybody doing this to the extent we are doing it,” Rauh said. “[Other banks] are reconfiguring their branches, but the emphasis is on saving expenses or doing the same old things in a slightly different way. There isn’t anybody who has really rethought the business model in this way.”
Other financial institutions have heard what CGB has been doing, and have reached out asking the bank to mentor them, Dufficy said.
John S. Carusone, president of the Bank Analysis Center Inc. in Hartford, said there have been other banks around the country, particularly community lenders, that have been hosting events too.
“To the extent they can provide space for activities in branches, it allows them to attract new relationships and clients,” Carusone said. “It’s one way of preserving the branch system without resorting to strictly electronic banking. There is a lot of logic to it, and it has proven effective.”
Middletown-based Liberty Bank, for example, offers credit building workshops, first-time homebuyer seminars, and an Academy for Small Business aimed at helping new entrepreneurs, according to Amy Helbling Crafa, Liberty’s corporate communications officer.
CGB’s reinvention has been years in the making, and the bank has continued to make improvements as it gets feedback.
“Every time we reinvent a branch, we are taking feedback from staff and customers and making it better,” Dufficy said.
Another change through the CGB reinvention has been in technology and making staff more mobile. Historically, bank employees have been attached to computers at a fixed location.
CGB has shifted to having mobile devices and laptops for staff, so they aren’t tethered to one spot, Rauh said. CGB is also moving away from staff members having one role, such as teller or customer service representative.
When asked if CGB’s strategy might just be the key to helping brick-and-mortar banks not only survive, but thrive, Rauh says, “Yes, absolutely.”
“That is certainly what we are betting on,” said Rauh, adding he thinks long term there is growth opportunity for his bank in Hartford and New Haven counties. “For us, we really think this is a key to our long-term survival. I used to have a boss who said, ‘You can’t cut your way to success.’ ”
Most Recent
Most Recent
0 Comments