Can Financial Institutions be a Third Place?

August 12, 2010

Starbucks recently started offering free, no registration required, wifi at all their locations.  That interests me because I made full use of Starbucks Wifi during my recent vacation that turned into a workacation.  I didn’t have to pay, but would have paid if necessary.

Starbucks knows I would pay for access, but they don’t want to charge me.  Seems a bit counter intuitive for a public company that is supposed to be  maximizing returns for their shareholders, right?  Well, not really.

Starbucks has always been about more than coffee.  They’re an experience.  The people who work there are fun and cheerful. Take an hour one day and listen to conversations that take place at a Starbucks counter.  It’s definitely not a typical retail purchase experience.  They strive to be a desired destination rather than just a provider of fuel like your local shell station.

Their new Wifi strategy is right in line with the Starbucks experience.  Free wifi will draw more people to their locations.  They’re not the first company to use Wifi like this.  Even McDonalds has free wifi.  However, McDonalds, and most other “free” wifi, hotspots require that you have some sort of existing relationship with the wifi partner (i.e. ATT broadband or T-Mobile phone service).

Starbucks doesn’t require registration or customer credentials for their wifi partner.  It really is free. They’re planning on doing more than just offering free access to the Internet.  Later this year,  Starbucks will roll out new content that will only be available through their in store wifi access points.  They call it Starbucks Digital Network.  SBN offers access to premium content that normally requires paid subscriptions.

Uhmm..why don’t banks and credit unions do this?  The branch isn’t going away anytime soon. You know what is going away?  People who want to interact with traditional bank branches.  Why go into a branch at all if I am going to deal with someone who knows less about what I need than I do?  Why go into a branch so I can stand in line while I watch the stock ticker scroll by on the TV in the corner?

Umpqua Bank already has, and many credit unions have tried to make their branches a destination.  I am, like many, skeptical when FI’s try to make the branch into a place where people will want to spend time.  “Really, you want me to come in and hang out with people and talk about money? Why would I do that?”

For starters, how about free wifi?  Really fast free wifi?  What if my local branch offered financial advice and access to premium content not available over the public internet?   What if inside the bank, I could read the electronic Wall Street journal for free?  What if it looked and felt little more like a five star hotel and a little less like a used car dealership? What if the bank let me use iPads while I was in the bank?  What if each branch had a daily drawing and the winner received $1,000,000?

Okay, that last one would definitely get me there, but probably isn’t too realistic.  There are services, there are environments, and there are people who could get me to visit a branch and keep me there for more than 5 minutes.  Banks can become more like a Third Place, but it will take more than a free pen, a paper cup, and some Sparkletts water to get there.


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  • Jim Bruene

    It’s an interesting question and Umpqua, ING Direct, and some others have had success making their branches inviting enough to hang out in. But honestly, no normal person wants to hang out or meet their friends at a bank or CU (“hey john, meet me and carla at the First Bank lobby”).

    ING Direct and Umpqua are outliers, using cool branches to reinforce their brands. There’s no ROI for most FIs to try to turn their branches into everyday coffee shops. Take it from a Seattlite, banks won’t get the coffee right, the food will be mediocre, and the ambiance won’t have the right look and feel.

    That said, free branch wifi for customers, is a good idea for many reasons.

  • Joey

    I agree Jim. It would take a comprehensive strategy to make bank branches a destination. You couldn’t just turn on free wifi and expect people to start spending time in the branch.

    The way most branches are built and located is not conducive to the branch as a destination strategy. However, I think many of the branches in downtown Metropolitan areas, where branches are located in store front retail space, could actually become destinations.

    The ROI on such a strategy is also dubious. But Umpqua claims it works and has published numbers to back it up.

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