With technology advancements increasingly letting consumers bank wherever they want, including Mount Everest, the future relevance of the branch will hinge on financial institutions finding ways to lure customers into their facilities, according to Umpqua Holdings' Chief Executive and President Raymond Davis.

"The bank branch has to change," Davis says. "It has to entice people to come in. That's a challenge for banks."

Recent research has found that many financial institutions plan to keep opening new branches in the years to come.

The debate on how to increase the relevance of the branch — and whether to even do this — is much talked about within the industry and has been for years. Approaches vary by company, but Davis believes traditional branches with tellers locked behind glass windows and rows of ATMs are goners. "Those days are toast," Davis says. "They will have to evolve, and they will evolve into something much smaller in most cases and something more customer-centric."

Umpqua decided to try to turn its physical properties into places that people wanted to linger in, rather than speed past, 10 years ago. It sought out inspiration from companies outside the financial services realm. Among its many muses are Ritz-Carlton, Disney and Nordstrom, brands regarded for strong customer service. "The best ideas bankers can get will come from outside the industry," Davis says.

Setting the Umpqua stores apart from other banks' branches are: computer station areas, free chocolate coins and coffee for customers, a phone that lets a patron dial Davis directly, and interior designs more closely resembling hotel lobbies than traditional bank branches.

"Our facilities look like a retail store," Davis says. "When people walk by, they are intrigued."

Plus, Umpqua hosts events in its space, such as yoga classes and book readings, to draw people in. "We try to make it sort of fun," says Davis.

Floor traffic depends on the store and location; specific numbers weren't disclosed.

Beyond finding ways to entice people to come into its stores, Umpqua also decided to build smaller facilities, called neighborhood stores, beginning in 2006.

The tinier branches, built where "people walk, shop and live," are designed to expand the bank's footprint in an efficient manner, says Davis. The size of neighborhood stores typically runs between 1,000 and 1,500 square feet. Despite the smaller spaces, neighborhood stores aren't shy about implementing consumer-facing technology. They provide computers for use by the public, an electronic menu displaying local events in the area as well as a "Discover Wall," an interactive screen that presents bank products and services to patrons. Events are held in the neighborhood stores, too.

Umpqua, which counts more than 20 neighborhood stores, is readying to open a new location in Templeton, Calif. later this year. Umpqua boasts more than 200 stores altogether. The cost to build a neighborhood store is $500,000.

When hiring staff for its stores — small or large — Umpqua looks outside of banking for talent. "We can teach people the job," Davis says. "It's much more difficult to teach an attitude. [Employees] need to come with a sparkle in their eyes."

Looking ahead, Davis expects more banks to shrink their future branches.

Wells Fargo & Co (WFC), for example, built a smaller branch footprint in April. Like Umpqua, it is referring to its new location as a neighborhood store.

Beyond creating atmosphere and building smaller footprints, analysts argue that banks nationwide need to find ways to transform the ways in which financial products are sold in order to make their branches profitable.