Chase Affiliate Tries Retail Store Approach to Branches

In an attempt to build withering market share, Chase Lincoln First Bank is joining the trend toward constructing branches of the future.

Since mid-June, the upstate New York affiliate of Chase Manhattan Corp. has opened or remodeled 14 branches that are now offering a variety of products in a department store setting.

Like other banks that have adapted a Sears-store look at some of their branches, Chase Lincoln says the new approach has increased retail revenues.

In just three months, officials said, they have attracted $25.5 million of new deposits at the prototype branch in Rochester.

"Our market share was starting to fall off," said Stephen Herz, a senior vice president at the bank.

Forerunners of Approach

The branches utilize an approach toward delivering retail products that was minted in the mid-1980s by innovators like Dollar Dry Dock Savings Bank in White Plains, N.Y., and Banc One in Columbus, Ohio.

When customers enter the new Chase Lincoln branch in Rochester, they are approached by salespeople who work the floor, pushing certificates of deposits and other products, Mr. Herz said. With no apologies for the hard-sell approach, he compares it to the greeting customers receive when they buy refrigerators.

Like other banks with so-called branches of the future, the Chase Lincoln branches also have semiprivate offices for the sale of investment products and completion of applications.

Though Chase Lincoln offers a panoply of retail products -- including mortgages and home equity loans -- customers are interested primarily in opening deposit accounts, he said.

Loan Demand Slack

The branch has booked only $350,000 in new loans thus far.

Mr. Herz acknowledged that the loan portfolio is slim, but said it was partly because the marketing push has been on deposit products. The bank, for example, offered a special rate on one-year certificates of deposit. In another indication that assets are less important than liabilities, the branch does not book mortgages.

Chase Lincoln operates in a competitive environment. It goes head to head with Rochester Community Savings Bank, Fleet/Norstar Financial Group Inc., Marine Midland Banks Inc., Citicorp, and KeyCorp.

At least one rival is taking Chase's success in stride. "In general, it's a benefit to consumers whenever any bank does anything like this," said Curtis Powell, senior vice president and director of marketing at Rochester Community Savings.

Rochester Community itself adopted a merchandising approach to retail products last year, resulting in a 15% increase in checking accounts and annuities, Mr. Powell said. He and Chase Lincoln's Mr. Herz said consumers as well as bankers are the beneficiaries of the revamped approach to selling.

"Consumers were changing, our competitors were changing, the whole marketplace was changing," Mr. Herz said. Customers really want information so they can make the best choice available to them, he added.

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