Banking on Change

Consumers are changing how they bank. In response, TD Bank is changing how it builds

TD Bank’s interiors give customers flexibility in interaction, whether they need to sit down with someone or just quickly use an ATM.

Banks used to be magnificent. As beautiful as they were big, banks were not only monuments to money, but also watersheds of American architecture.

Take the Second Bank of the United States in Philadelphia, for instance. Built between 1819 and 1824 at a cost of nearly a half-million dollars—the equivalent of nearly $10 million today—it features a temple structure modeled after the Parthenon in Greece. Or there’s the US National Bank Building in Portland, Oregon. Opened in 1917, it features Corinthian columns standing 54 feet high, white marble imported from Italy, and custom bronze doors. And then there’s the 14-story Federal Reserve Bank of New York Building in Manhattan. Erected between 1919 and 1924, it occupies an entire city block and was designed in the style of a Florentine palazzo.

“Historically, banks wanted to have the biggest, most enormous, highest-quality physical structures possible because that’s what gave their customers comfort that their money was secure,” explains Jason LaVeglia, North American real estate COO at TD Bank, which operates approximately 1,300 branches across the eastern United States. “To demonstrate their strength, banks had beautiful buildings made of granite and limestone—which are obviously too expensive for any retailer to use in their designs today.”

The Future of Banking:
Inside TD Bank’s New
Concept Store

Baltimore is a city steeped in history. For TD Bank, however, Baltimore doesn’t just represent the past. It also represents the future, as “Charm City” is home to the bank’s first full-service light concept store—a one-stop banking shop designed to offer a very large breadth of services in a very small real estate footprint.

Opened in October 2014, the new Canton Crossing branch totals just 2,275 square feet, compared to an average of 3,000 square feet at other retail banks. Instead of traditional teller lines, the store features a cashier’s desk where guests check in before engaging with cross-functional employees known as financial service associates, who roam the store with tablet computers to assist customers with various banking queries. Other highlights are the store’s hours—it’s open longer than its competitors—and its high-tech ATMs, which produce $1, $5, $20, $50, and $100 denominations instead of the standard $20.

“It’s early still,” LaVeglia says. “But the feedback we’re getting from both customers and employees is that this is something we should actively integrate across our portfolio.”

Although it’s easy to miss the grand designs of yore, contemporary banks don’t need to convey muscle. Instead, they need to demonstrate adaptability, versatility, and efficiency.

To do just that, TD Bank has spent the last several years rebuilding its approach to retail banking—literally.

“Traditionally, we had a prototype for our free-standing stores. It had a couple different variations to meet the needs of different communities, but in essence, when you got inside the front doors of the bank everything was the same,” says LaVeglia, a civil engineer who began his career as a project manager for Exxon, leading projects to build new gas stations and retrofit existing ones. “We no longer have a single ‘prototype.’ What we’re doing today is looking at the markets where we’re growing … and developing a unique design and experience for each and every new store that we deliver.”

Two trends have driven the shift. The first is economic in nature; the second, technological.

“Obviously, the economic downturn starting in 2008 and beyond impacted the banking industry and made a lot of banks—including us—think differently about how to run their business,” continues LaVeglia, who commenced his banking career in 2003 when he joined Commerce Bank, which TD Bank acquired in 2008. “The other big change is technology, which in the last two or three years has created some disruption in the industry with respect to how people may want to bank going forward.”

The latter trend is called “omnichannel” banking: Customers want to be able to bank at a traditional branch, at an ATM, on the phone, on their computer, and on their smartphone or tablet, and they want to be able to move fluidly from one channel to another to customize their experience based on their time, mood, and banking need.

“It’s hard to believe, but just a few years ago there was no ability to deposit checks using your phone, no ability to perform transactions from your computer, and no ability to do live chats with your bank screen-to-screen,” LaVeglia says. “Technology has taken off so quickly, and it’s impacting not only banks, but all retailers, who ultimately will need to continue evolving to turn those technologies into opportunities that drive their business.”

The first step TD Bank took in its own evolution was shrinking the square footage of its typical retail branch, which in 2012 went from an average of 3,700–3,900 square feet to an average of 2,500–2,900 square feet.

“Becoming smaller gave us more flexibility and nimbleness to be able to get into areas that we couldn’t get into in the past because of real estate availability and size,” LaVeglia explains. “We challenged ourselves to ask, ‘How can we deliver the same level of service and sales to our customers, but with a smaller footprint?’”

"We're moving away from a static layout ... and designing our stores in a way that gives us more flexibility." —Jason LaVeglia, North American Real Estate COO
“We’re moving away from a static layout … and designing our stores in a way that gives us more flexibility.”
—Jason LaVeglia, North American Real Estate COO

Embracing a smaller footprint allowed TD Bank to not only be more efficient in its store channel investment—smaller spaces require fewer resources—but also its customer experience, which it increasingly is customizing to suit its customers’ diverse banking habits.

Assisting with this customization are several different retail concepts. “Hub” stores, for example, resemble a traditional bank branch, with distinct areas devoted to ATMs, teller transactions, and lines of business, such as mortgage lending and small business banking. New full-service stores, on the other hand, feature special cross-functional employees called financial service associates who “float” through the store with tablet computers to enhance customer service.

“We’re moving away from a static layout … and designing our stores in a way that gives us more flexibility,” LaVeglia says. “It gives us the ability to greet the customer when they walk in, immediately engage them, understand what their needs are—do they require a private setting, do they prefer to sit down or stand up, do they want to speak with a live person, do they prefer to use the ATM—and meet those needs appropriately.”

Instead of performing a single function while standing in a single spot, such as behind a teller counter or in a private office, staff is versatile, mobile, and able to come to customers and assist them with whatever their needs are. As a result, it’s kind of like going into an Apple Store—except it’s a bank. A truly omnichannel bank, at that.

“One of the biggest things I’ve learned in retail real estate is that it should always start with the community,” LaVeglia concludes. “If you engage the community—if you understand what they want, who they are, and what’s going to make them happy—both your design and your business will be successful.”