Of Cabbages and Cash.

• Author: Garnett, John W.
• Position: Bank branches in supermarkets

You have a watermelonsized opportunity to market your bank when you open a branch inside of a local supermarket. It costs less than a traditional branch plus it gives you a chance to sell your services to thousands of walk-by prospects weekly. But in-store banking is not for all institutions. Here are the basics.

Is it time to consider adding a branch in the location where your customers buy their Wonder Bread, Kellogg's Corn Flakes, tomatoes and Hormel hot dogs? If you already have in-store branches, is it time to consider adding more?

Currently, about 8,100 financial institutions--community banks, regional banks, national banks, credit unions--have branches inside supermarkets or supercenters (combined discount department stores and grocery stores). In-store banking is an important part of the delivery strategy for many institutions. Some have as many as 10, 20 or 50 or more locations. Others, as the opportunity presented itself, have opened only one or two.

New technology and changing marketplaces have made it more practical that ever for financial institutions to expand delivery channels by opening in-store branches. This does not mean that in-store branches are right for every institution. In-store banking involves special challenges, and institutions need to clarify ahead of time what they hope to accomplish before they commit to this approach.

In-store branches are an inexpensive alternative to traditional brick-and-mortar offices. They frequently cost only one-quarter to one-fifth the price. And, while the up-front cost is attractive, the real opportunity is the marketing exposure to the 15,000-30,000 shoppers who typically walk through a large supermarket each week. Generally, most of these shoppers are not currently your bank's customers. Banks that use in-store branches to grow typically assign staff to approach and sell shoppers on the idea of opening a bank account.

In-store branches provide customers the convenience of one-stop grocery shopping/banking. These branches are typically open from 10 a.m. until 7 p.m. during the week, with Saturday and Sunday hours as well. While Sunday is not a heavy transaction day for many in-store offices, it is the second busiest shopping day of the week at many supermarkets. If the financial institution chooses to open on Sundays, it should be staffed to allow for a high level of sales activities.

From the retailer's perspective, in-store branches encourage shopper loyalty and increased...