Indie Banker


A Retail Reinvention

Tom Amell leads Pioneer Bank’s bank-and-shop branches to draw more foot traffic and transactions

By Kathryn Jackson Fallon

Pioneer Bank
Headquarters: Troy, N.Y.
Assets: $750 million
Retail locations: 17
Full-time employees: 193
Chartered: 1889

Brisk New Business

Pioneer Bank opened two new concept branches in Albany and Troy, N.Y., with expanded retail shopping options. The bank’s Shop at Pioneer retailing concept allows customers and potential customers alike to mail packages, buy locally made gifts and conduct their banking business at the same location.

“Create a retail store where customers can go and not only take care of their banking but they can take care of other things that are important to them,” says Tom Amell, the bank’s president and CEO.

A few years back, Tom Amell, CEO and president of Pioneer Bank, was worried about declining customer foot traffic and activity in the community bank’s 17 retail branches in upstate New York. For a long while, constantly evolving retail delivery channels throughout the industry has meant that fewer banking customers are and will be visiting branches. But instead of taking the route some community banks have followed—consolidating branches and reducing staff—Amell wanted Pioneer Bank to blaze a different path to generate new growth and greater operational efficiency.

“We’re not going to close branches,” Amell says. “Our whole mission is to be committed to our community. We really have one option. How do we get more customers to come back into the branch?”

Reaching out to his staff and customers for ideas, Amell asked what additional services they would personally like to find in a bank branch. What if people were able to mail a package or print and make copies of documents in a bank branch, in addition to their traditional banking activities? What if they could also have photos developed and printed there, and buy gift items such as picture frames, stuffed animals and gourmet coffee and chocolate treats—would those amenities draw them to visit that branch more often?

“The branch is alive and well, and customers come in and they love it.”
—Tom Amell, Pioneer Bank

The consensus response from the $750 million-asset community bank’s employees, and later, its customers, Amell found, was yes.
Under these circumstances, the Shop at Pioneer was born, a banking and retail concept that now offers all of those services at two Pioneer Bank branches. Expanding the industry’s definition of full-service community banking at the same time, the two branches allow both current and potential banking customers to take care of multiple errands—banking and nonbanking—at one curbside stopover.

Putting in these shops-within-the-bank branches required a new, more open floor plan designed with the extra nonbanking retail services in mind. Pioneer Bank tried the expanded branch-retail concept first in the upscale Clifton Park area outside of Troy a year ago. The branch has a concierge to greet customers as well as clusters of open high-tech pods to replace a long line of teller windows. The cornerstone of the branch’s nonbanking conveniences is a U.S. Postal Service station where people can mail letters and packages. Customers can also print and copy documents and browse shelves featuring stationery and last-minute gifts.
The second branch that incorporated the shops, in Albany on a highly visible retail corner in the city, opened in November 2013. This branch has a smaller footprint than the 3,300-square-foot Clifton Park location, but it offers free WiFi, a meeting room that groups can use as well as a post office. The Albany branch uses only 1,200 square feet, but Amell thinks that the site, because it is smaller and requires fewer employees, will be the most operationally efficient in the long run.

Pioneer Bank is taking full advantage of the Albany branch’s high-profile corner location by using a high-resolution digital sign that displays timely messages and information that can be updated from the bank’s headquarters in Troy. “We are using that to partner with the city on promoting important events for the city or congratulating the mayor,” Amell says. “We are a stronger community partner because of it.”

Reinventing branch banking

Pioneer Bank has changed its staff training model to use these additional retail activities in its two branches to its best advantage, including hands-on training for the USPS transactions, handling credit card purchases and managing the copy center and photo printing kiosk. “Whoever greets that customer is able to take care of whatever they need from opening up a checking account to shipping a package to helping them make a photocopy,” Amell says.

All of the employees at the two branches share responsibilities in supporting the additional retail activities at the branches, doing everything from selecting merchandise with which to stock shelves to dealing with vendors to scheduling how the public meeting rooms are used. “Everyone was on board and eager to get started,” Amell points out. “It’s their branch. [The bank’s branch employees] dictate who uses the community room. They run it like their own business.”

Before implementing the new branching concept, Amell and Pioneer Bank first had to make some key decisions about this major investment. Would everyone be patient enough to wait to achieve results? This would be a long-term commitment and about changing the industry. What merchandise would be compelling enough to bring people in and how would they handle the proceeds from the sales of the retail products and services?

The new retail activities at the two Pioneer Bank branches benefit Albany and Troy in another, more tangible way, Amell points out. “Each month we pick a charity of choice and whatever we sell in our store that month we donate the proceeds to that particular charity,” he explains. “I’ve given full empowerment to the branch to choose which charity they want to support.”
The two Shop at Pioneer branches have been a success, with bank transaction volumes at those locations increasing about 20 percent, Amell says. Even more important, the new branches are making a bold new statement within the communities they serve, he adds. “We’re not giving up on branch banking. We’re going to reinvent it. We’re going to reinvest in it, and we’re going to create an environment for our customers that offers value.”

Lessons learned

How can other community banks take a cue from Pioneer Bank’s new shop-and-bank approach to retail banking?

Amell says adding the right mix of several new retail activities to a traditional branch location—not just adding one or two limited activities, such as only adding a coin-counting machine or only offering meeting rooms for public use—is important. Any one new activity by itself won’t shake things up enough, he says. Instead, several new retail activities—which may be different for different communities or community banks—should work together to help create an overall new one-stop retail destination.

But including the right mix of retail activities, one that draws people to the retail space throughout the day, is also critical, Amell says. For example, the postal equipment costs of putting only a postal service counter in a branch could easily drive up operational expenses too significantly without generating a sufficient financial return. However, having an array of retail options to meet the different needs of customers at different times could make the concept work best.

“We’re not giving up on branch banking. We’re going to reinvent it. We’re going to reinvest in it, and we’re going to create an environment for our customers that offers value.”
—Tom Amell, Pioneer Bank

However, Amell also cautions that expanding nonbanking retail activities inside branches may not generate much retail revenue. “If banks look to do this to drive [retail] revenue, it’s probably a mistake. At the end of the day, we’re a bank and our expertise is around banking services.”

So far, Amell is working on the expanded retail concept for a third Pioneer Bank branch location. The bank has shown that offering a selection of nonbanking retail services and products inside the branches could be the necessary draw to bring back the right amount of customer foot traffic that provides the huge opportunity for all retail outlets.

Amell sums up the bank’s unusual branch strategy with a “build it and they will come” philosophy: “Create a retail store where customers can go and not only take care of their banking but they can take care of other things that are important to them.”

Kathryn Jackson Fallon is a writer in New York.