Small Space, Big Business: Will a Micro-Branch Work for You?

CUNA’s E-Scan Website
August 17, 2010 | COMMENTS

Micro-branches, occupying between 390 to 700 square feet, are becoming increasingly prevalent and valuable in meeting the financial needs of consumers, says Albert J. Vegter, AIA, president of Daniels and Zermack Associates, an architectural design firm specializing in financial institutions. Vegter's observations appeared in a recent issue of Michigan Banker.

Typically micro-branches are housed inside another building, such as a retail outlet or on a college campus. While a full range of financial services including tellers and ATMs may be offered, micro-branches lack a drive up. Employees are usually provided rest rooms, break areas, and an office for a manager.

Three advantages stand out for institutions utilizing the micro-branch:

1. Their specialized location can serve a clientele with few other immediate, convenient choices.
2. Capital costs to open a micro-branch are less: fewer furnishings, equipment, and built-in components.
3. Short set-up period allows for quick start.

A few challenges typically present themselves, but, according to Vegter, most can readily be resolved:

• The landlord will likely want to approve the layout and appearance.
• Identification signage will need to be negotiated, and sometimes might pose limited opportunity, especially with the exterior.
• Hours of operation may differ from the open hours of the housing facility, requiting a secure means to shutter the branch.

Other advantages of the micro-branch include potential market testing of an area for a larger branch, additional consumer traffic provided by the larger entity housing the branch, and an effective way to provide services at a lower cost. Smaller spaces, however, require special planning considerations:

• Layout of services in a small space demands creativity; consider two-way TVs as an option in limited lobby space.
• Service functions and areas can be designated by using architectural shapes, floor design, ceiling panels, and color.
• Furniture likely will need to be smaller, and the placement and type of signage and marketing materials is important.

This article originally appeared on CUNA's E-Scan Online Research & Advice Portal. Reprinted with permission.