Hard Times Spell Opportunities For Banks Responding To The Customer Need For Trust

1. THE SCIENCE OF SHOPPING
HARD TIMES SPELL OPPORTUNITIES FOR BANKS
RESPONDING TO THE CUSTOMER NEED FOR TRUST
Q1 2009
There is no question, the American consumer-banking customer is
1 Industry Consolidation
traumatized given the sub-prime fallout, plunging stock values,
2 Evolving the Role of the decimated 401(k)s and the frightening media coverage regarding the
Branch state of financial institutions. Where do consumers turn for
reassurance and guidance they can trust?
2 Science of Shopping and
Branch Banking
More than print or media advertising, the branch is where we find
3 Conculsion the cheapest, easiest and most effective way for an institution to
reach its customer base. The branch is a three-dimensional brand
statement. Beyond headline and media, it is also a living, breathing
embodiment of the institution itself. From platform to teller station,
from ATM installation to paper and electronic messaging, to the staff
that provides face-to-face service – all contribute to the public’s
perception and comfort level with the institution.
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In this volatile environment, how can institutions best manage the
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brand that sits in the midst of our communities?
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INDUSTRY CONSOLIDATION
De novo branch development, strong in 2006-2007, slowed in 2008, forcing banks to reduce budgets
and improve efficiency. The slowing market coupled with industry consolidations put added pressure
on competing banks (Table 1).
TABLE 1: 2008 BANKING COMPANY MERGERS
ACQUIRER ACQUISITION NO. OF BRANCHES TRANSACTION NAME OF MERGED
ACQUIRED1 VALUE ENTITY
$50.0 billion0
Bank of America Merrill Lynch -- Bank of America
$15.1 billion2
Wells Fargo Wachovia 3,125 Wells Fargo
$8.5 billion0
TD Bank Financial Commerce Bank 476 TD Bank
$5.1 billion3
PNC Financial Services National City Corp 1,451 PNC Financial Services
$1.9 billion4
JPMorgan Chase Washington Mutual 2,180 JPMorgan Chase
$1.1 billion0
JPMorgan Chase Bear Stearns -- JPMorgan Chase
5/3 Bank First Charter Bank -- -- 5/3 Bank
BUSINESS BRIEFING Q1 2009 1

2. THE SCIENCE OF SHOPPING
GLOBAL CONSULTING: TRANSFORMING BUSINESSES WORLDWIDE
In the past, such acquisitions may have caused disruption, presenting opportunities for the
competition to steal customers, but today, firms like Wells Fargo, Chase and PNC have become
experts at smoothly integrating acquired banks and courting the most profitable customers from
the acquired firms5. So how do institutions ensure that they remain relevant to their customers and
competitive during turbulent times?
EVOLVING THE ROLE OF THE BRANCH
Branches remain an important delivery channel to the consumer market. Three in four households
conduct their banking within three miles from home6. Despite the growth of electronic banking in
the last ten years, consumers are using electronic channels in addition to, rather than in lieu of,
traditional channels6. So how is the role of the branch evolving?
Many branches are refocusing efforts by handling more service-intensive, complex transactions.
Research has shown that customers choose to perform certain transactions face-to-face. To
capitalize on in-store presence and corresponding sales opportunities, de novo, infill or retrofit
branches must marry shopping behavior to the shopper environment. As a result, new methods
are being applied to analyze the efficiency and effectiveness of a branch’s ability to reach the right
customers, while making each in-store visit as profitable as possible.
THE SCIENCE OF SHOPPING AND THE BRANCH
Shopper behavior is intrinsic to humans and, most often, has no geographical boundaries. Banks,
drugstores, movie theaters, supermarkets, and airports – all of these environments draw specific
types of people and specific types of behaviors. By taking action during the downturn to identify
opportunities and obstacles in the shopping environment, banks will be better positioned to
nurture customer relationships and see their business soar into the upturn.
Brand: Utilizing the brand to support the shopping environment creates the reality of what
customers experience and what they come to expect from the branch. The brand is the intimate
relationship a bank has with its customer. The brand is not a collection of marketing tactics or
components used in communication. The brand is the way banks do business. Key questions that
banks should be asking themselves include: Can we put the face of safety on our brand? What
does our brand mean to newly acquired customers?
Customer Needs: Who is looking out for the branch? Who is looking out for the branch visitor?
Branches focus on getting their existing, acquired and new customers into the store, but managers
need to determine if the space accommodates and meets their customers’ needs. Is there a setting
for a group discussion? Are there quiet corners for distraught customers? During these
challenging times, banks must deliver superior customer service and innovative ideas to bridge the
gap between consumer uncertainty and their role as a trusted advisor.
2 BUSINESS BRIEFING Q1 2009

3. THE SCIENCE OF SHOPPING
GLOBAL CONSULTING: TRANSFORMING BUSINESSES WORLDWIDE
This requires each branch to generate unique ideas and solutions based on customer needs. For
example:
City Center Branches: Small business owner customers need cash to make payroll.
Does the branch offer private, face-to-face guidance and counseling?
Suburban Stand-Alone Banks: Retirees and individuals on fixed incomes are worried
about their heating bills. Does the bank offer “town hall” informational meetings?
Suburban Supermarket Branches: New families are fearful of losing their homes and
single mothers worry about their monthly grocery bill. Does the branch offer
Saturday morning coffee discussions about where to go for help and when to ask for
help?
Urban Street Front Branches: Urban nine-to-fivers worry about what they should be
worrying about. Can the branch offer happy hour sessions that cover the basics?
Office Space Branches: Mid-level service workers are still on track for a first-time
home. Can the branch help them understand what it takes in this climate to buy that
home?
The physical space must address the intended uses of the branch. There will always be customers
who want to get in and out, but banks have an opportunity to capture and accommodate those
who should and want to spend more time in-store.
CONCLUSION
The Science of Shopping during a downturn is about saving stores, saving customers and improving
profits. By looking at demand profiles and shopper behavior, the financial crisis has created a unique
opportunity for banks to serve as a primary resource in helping consumers with their financial
concerns. As a trusted advisor, banks will be better positioned to nurture customer relationships
and will emerge even stronger into the upturn.
1. FDIC (As of October 2008 – Numbers based on quarterly self reporting by banks).
2. David Ellis (October 3, 2008). quot;Wachovia: Wells in, Citi outquot;, CNN Money.
3. Dan Fitzpatrick, David Enrigh and Damian Paletta (October 25, 2008). quot;PNC Buys National City in Bank Shakeoutquot;, The Wall Street Journal.
4. Eric Dash and Andrew Ross Sorkin (September 26, 2008). quot;Government Seizes WaMu and Sells Some Assetsquot;, New York Times.
5. Bank Administration Institute (BIA) Retail Banking Community.
6. Raddon Financial Group (June 2007) “Branch Banking: Survival of the Fittest”.
3 BUSINESS BRIEFING Q1 2009

4. THE SCIENCE OF SHOPPING
GLOBAL CONSULTING: TRANSFORMING BUSINESSES WORLDWIDE
ABOUT THE GLOBAL CONSULTING GROUP To discuss your immediate needs please contact:
Cushman & Wakefield’s Global Consulting Group delivers Matt Winn
actionable strategies addressing our client’s vital business and real Managing Director, Retail Consulting
estate challenges. We partner with clients looking to establish Cushman & Wakefield
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ABOUT ENVIROSELL
For more information about the
Combining traditional market research techniques, anthropological
Global Consulting Group, contact:
observation methodologies and videotaping, Envirosell has
established its reputation as an innovator in commercial research Andrew Ratner
Executive Managing Director
and as an advocate for consumer friendly packaging and shopping
Global Consulting Group
environments. Paco Underhill, Founder, CEO and President, is a
Tel: 213.629.6562
leading expert and pioneer of shopping behavior and research. His
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book Why We Buy: The Science of Shopping has been published in
26 languages, and has sold more copies than any other retail book
in history. A second edition is expected for release in 2009 by
Simon & Schuster. For more information visit
www.envirosell.com.
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4 BUSINESS BRIEFING Q1 2009