Republic National Bank is borrowing a page from stores like Barnes & Noble and Gap.
The New York bank, whose parent is being bought by London-based HSBC Holdings PLC, is opening user-friendly "investment lounges" at its 89 bank branches in New York and Florida.
The idea is to help make people aware of Republic's full-service brokerage capabilities. Customers can browse through investment-themed books and periodicals, attend seminars, look at financial Web sites, or watch the ticker on CNBC.
John Tamberlane, the president of Republic's consumer financial service division, designed the lounges to promote the idea of one-stop shopping. The challenge, he said, was to make traditional banking customers aware of Republic's range of financial services and ease any concerns they might have about the bank's expertise and product choice.
"Most bank branches look the same now as they looked 50 years ago," Mr. Tamberlane said. "How can you change people's perception if you don't change your look?"
With their soft lighting, overstuffed armchairs, and modular bookshelves from Ikea, Republic New York's investment lounges feel a bit like bookstore cafes - albeit without the coffee. Their opening hours mirror those of neighborhood retailers, and a "greeter" hovers nearby at all times to answer questions. Anyone who wants more information can speak to an investment adviser.
Introduced last summer in a handful of Manhattan branches, the lounges are in 25 Republic branches and are slated to be added to the rest by the middle of next year.
Though the lounges are set up as separate departments in existing locations, Republic will build its new bank branches around the lounges, with teller windows and financial consultants tucked away in the back.
Bank manager said the customer reactionhas been favorable, evidenced by enthusiastic comments and increased foot traffic.
John McCaffrey, who works in a law firm, comes in every day during lunch to check stock quotes, while Linda Sobers, an advertising executive, said she likes the investment seminars so much that she has brought in two friends.
And, according to Mr. Tamberlane, the additional foot traffic has helped fuel an increase in investment product sales.
Sales have jumped over 70% through May, to a rate of roughly $600 million a year, he said.
Though it is hard to say how much of that increase is attributable to the investment lounges, Mr. Tamberlane said he thinks they have played a large role by increasing customers' awareness of Republic's investment products and prompting more clients to "sit down with a financial consultant."
Through its subsidiary Republic Financial Services Corp., Republic offers over 240 mutual funds from 10 third-party providers. The bank does not push its own $2.46 billion Republic Funds family over its partners', and none of the brochures available in the lounges mention Republic's investment products. In keeping with the bank's pressure-free approach, financial advisers do not earn commissions on sales.
Les Dinkin, a principal at NBW Consulting Group in Westport, Conn., said the concept of investment centers such as Republic's makes sense when more and more money is migrating from traditional checking and savings accounts to investments.
"The start-up costs are not very high," he said, "so for a nominal amount of money, you can position yourself as much more of a full-service provider."
The average cost to install a lounge is $50,000, Mr. Tamberlane said.
"If you have 10 years left on a lease, then it costs $5,000 a year. Increase sales by 5% and you've covered it."
The lounges have for the most part been carved out of waiting space for tellers, space that is less needed now that more customers conduct their banking through ATMs and on-line.
Republic is not the first bank to experiment with investment centers. Pittsburgh-based Mellon Bank Corp. introduced investment libraries in hundreds of its branches in 1994, which, like Republic's lounges, feature comfortable chairs, periodicals, and computers for customer use.
Turner Design Inc. president Robert L. Turner, who designed both Mellon's and Republic's investment centers, said that while many of the basic elements were similar, Republic "took a big step further in terms of how they staffed it and outfitted it." Unlike the Mellon libraries, Republic's lounges feature a "greeter" who is always present to answer questions and educational handouts on topics such as IRAs and asset allocation.
HSBC's plan to buy Republic New York Corp. in the fourth quarter casts some doubt on the lounges' future, but Mr. Tamberlane said he thinks HSBC executives will be "thrilled once they've taken a look."
"I don't think the future of bank branches lies in transactions," he said.
