The popularity and success of supermarket branching has spawned a host of alternatives to the traditional retail bank office.

Some of these are virtual clones of supermarket branches - offices that share space with retailers of various other sorts. Others are specialty branches dedicated to selling specific financial products, such as mortgages or investment instruments.

What they have in common is a single goal: to make more efficient use of the money invested in physical facilities.

Wells Fargo & Co. has formed one of the most compelling branch alliances to date. In a twist on the supermarket branch concept, it has agreed to lease space in five of its branches to the Thrifty Payless drugstore chain.

"Wells Fargo seems to be dictating that, when it comes to bank branches, there are no rules," said Olen Thomas, Crestar Financial Corp.'s senior vice president and manager of premises-based retail delivery. "Others have followed the success of supermarket banking, and having drugstores makes it all the more interesting."

Bankers are split on the wisdom of the Wells Payless deal. Naysayers note the challenge the deal presents the bank's marketing department.

Mr. Garnett said the reverse strategy is unique, but he noted the precedents for banks' leasing branch space to third parties, such as travel agents or stock brokers.

For a rising number of bankers eager to boost sales, though, putting a branch in a retail store that has heavy pedestrian traffic is the way to go.

Some 40,000 to 60,000 customers shop Wal-Mart or K mart stores per week.

John W. Garnett, president of a supermarket banking firm called International Banking Technologies, said putting branches in high-traffic locations has grown into a "mainstream" delivery strategy.

"When you bring in different marketing tools," he said, "just offering customers another service is not the same thing as going outside and placing it in a store where there is high traffic."

Among those taking part in the trend is Richmond, Va.-based Crestar Financial Corp. The company is reconfiguring its branch network to include nonsupermarket retail locations.

"Gone are the days when banks built the same types of branches, held the same hours, and sold the same products," said Crestar's Mr. Thomas. "But we are gearing our branches to more accurately reflect what the industry is doing."

Crestar started building full-service branches in Virginia WalMart stores last February - in Culpepper, Salem, and Rocky Mount.

In the next six months, Mr. Thomas said, he expects to open four more, in the 400- to 500-square-foot range, at other Wal-Marts.

But the company is not stopping with Wal-Marts. Mr. Thomas said Crestar has hit on another high-traffic venue - the airport.

A full-service branch was installed last September at the Richmond airport; it also has an automated terminal that answers "what if" questions on auto loans or mortgages.

Other banks are embracing similar alternative delivery strategies. Banco Santander Puerto Rico, based in Hato Rey, has branches in Sam's Club and Wal-Mart stores.

"There is a different customer in Sam's or Wal-Mart than in the supermarket chains," said Jose Diaz, executive vice president of consumer banking.

"They have more time to look around and will have more time to do their banking than if they were shopping for food," Mr. Diaz said.

Bank One Dayton, a unit of Columbus, Ohio-based Banc One Corp., has opened offices with both an alternative location and a nontraditional focus: It has five home equity loan production offices in Roberd's furniture stores in Atlanta.

Observers said it's unusual for the Dayton, Ohio, bank to have a presence in Atlanta. But it sees the offices, which are nonchartered branches and cannot take deposits, as a way to sell credit products in a booming market.

Bank One's strategy has been to diversify distribution by finding high-traffic locations and offering sales and transaction services.

"By going to Atlanta with Roberd's, we are getting a national face," said Emerson Brumback, national director of retail distribution for Banc One Corp., "and it allows us to use a wider scope on the customer segment."

Banc One, which also has interactive video terminals at a West Virginia Wal-Mart, expects to continue devising alternative branching tactics.

KeyCorp in Cleveland has struck an alliance with Officemax-Copymax aimed specifically at the small-business segment.

Small businesses rely heavily on their local bank offices, and any extra service a bank can give its clients can improve its word-of-mouth reputation and, thus, its business, experts said.

The KeyCorp alliance, which began last month, gives small-business customers one-stop shopping for banking and certain printing services by renting space in bank branches to the copy chain.

In addition, the branches feature automated banking areas to aid small-business owners who want faster service. However, for customers who want personal service, a live banker will always be available, whether by screen phone or in person.

While Officemax isn't expected to sell banking services nor will KeyCorp sell copying services, employees in each area will understand cross-selling.

In addition to this alliance, KeyCorp has teamed up with Inc. magazine to hold small-business seminars that have generated hundreds of sales for the bank.

"Because of the limited resources we have and the desire to provide the best solutions," said Sandy Maltby, executive vice president of KeyCorp's Key Small Business Services, "we try to find what we can manufacture ourselves and where we can go to merge with entrepreneurs like us."

However, Ms. Maltby said, the company puts much thought into the companies with which it aligns. She said KeyCorp teamed up with the copy service chain because of their similar entrepreneurial approaches to service.

"We were not looking for companies to rent the space we have available to cut our expenses, or even meet with the highest bidder," she said. u

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