With lively town squares largely disappearing from the suburban landscape, banks are finding it tougher to attract retail business, say industry watchers. The question then becomes how to attract more retail business. The answer: Go where the people go.

For banks considering sites for branches it comes down to one thing, “foot traffic,” according to Eduardo Alvarez, senior vice president and director of strategy and design services at Willey Brothers International, a New Hampshire firm that provides retail branch design, construction and point of purchase communications programs for the financial services industry.

Despite increases in Internet banking, many Bay State banks are still aggressively expanding into areas where shoppers – and potential new customers – already congregate.

Increasingly, people are spending what little free time they have shopping, whether in supermarkets or in shopping centers, Alvarez said. Banks looking to increase their customer base must seduce the customer and part of that process is ease of use.

“The shopping mall [location] is convenience more than anything else. People will hang out in the malls, from teenagers to senior citizens. So you can sell directly to people or sell subliminally just by having a presence,” Alvarez said.

Out of the 1,000 shopping centers in Massachusetts in 1999, 40 had banks located in them, according to Patrice Selleck, manager of media relations at the International Council of Shopping Centers.

The trend began in the mid-1990s, said Selleck, when banks began opening branches in supermarkets. In shopping centers, branches are usually located in outparcels – stores that are on the outside edge of the structure so it can easily accommodate drive-through windows, she said.

Recently, several financial institutions in Massachusetts have applied for or received permission from the Division of Banks to open branches in supermarkets and shopping centers around the state.

Brockton Credit Union plans to establish a branch office at Village Shoppes at 95 Washington St. in Canton by the second quarter of 2001. The structure will be freestanding and will offer both a drive-up window and an ATM, said Leo MacNeil, senior vice president of marketing for the credit union.

Brockton Credit Union also sought permission to close a nearby branch. The decision to close the branch office at 785 Washington St. was made because of space limitations. It coincided with the restructuring of the Village Shoppes, MacNeil said. “We saw this as the best location for us to be in Canton as far as ability to attract more customers and being more convenient for existing customers,” he said.

The move isn’t part of a strategic plan to open new branches in malls, said MacNeil. Instead, his $680 million-asset credit union focuses on the best location in each situation.

For Springfield-based Hampden Savings Bank, the decision to open a branch at the Southgate Shopping Center in Agawam came as a result of responses to its Web site. “The last time Hampden opened a branch was in the late ’70s or so,” said Robert Massey, senior vice president and treasurer of the $260 million-asset bank.

The bank has offered its Internet service for the past six to eight months, he said. “If you want to make Internet banking successful, you still need to have the branch system out there,” he said. “So [customers] still feel that they have someone they can go to, someone they can talk to. And being a small bank, we don’t have the opportunity to offer all the bells and whistles the larger banks do,” he said.

The Agawam location is developing very rapidly, said Massey. The branch, which will also be freestanding, will abut an industrial park, a residential area and be in the midst of a shopping district. CVS recently opened a pharmacy there and a new Dunkin’ Donuts is located across the street. “So it’s really brought a lot of life back to the area. We see it as a great opportunity to round out our branch system,” he said.

For branches opening within the mall, Alvarez suggests putting in as much technology as possible, in the form of Internet banking kiosks, ATMs and stock trading instead of traditional tellers. “Real estate is expensive. You can go into a shopping mall and rent the size of a penny. It is reduced space so it needs to be devoted to sales. People have to feel welcome and comfortable in asking questions and financial advice,” he said, citing one bank design on which he worked that is built to resemble a living room with a fireplace to add atmosphere to the waiting area.

Still, that doesn’t mean that the outside of the branch should be in any way subdued, he said. “Banking is retailing. You’re in a shopping mall, you have to compete with the retail stores,” he said. Wherever the store projects out into the mall, that space should be open, filled with light and color.

Two elements of mall bank branches should project toward the outside of the shopping center, Alverez said. The brand and the merchandizing should be easily recognizable. And signs should make it clear to passersby what you are selling, he said. Foot traffic is walking past stores like The Gap, which invests heavily in merchandizing, so banks should keep that in mind, he said. Obviously a bank shouldn’t look like The Gap, said Alverez, “… but if you take the best of what they present … you will do very well as a bank.”

“In supermarkets it’s convenience, you follow the people, but in the mall you really have to compete with everyone else,” he said.

‘Well-Traveled Road’
Eastern Bank, however, has strategically planned to open branches in supermarkets but not malls.

“We found them to be very high cost and we haven’t pursued [mall branches]. [There are a] limited number of shopping malls,” said Mark Primeau, executive vice president of consumer banking at the $3.4 billion-asset bank. In some cases there may be another bank or two already in the mall, he said.

“We found we are much better off in a well-traveled road,” he said of the bank’s three supermarket branches.

“We just thought it was an excellent opportunity in consumer business. Supermarkets attract a lot of heavy traffic,” said Primeau.

Supermarket branches aren’t for attracting the high-rate CD shopper, he said. Instead, you want to attract customers seeking to conduct basic banking transactions, he said.

“For supermarkets, it’s really more about convenience. People have to go to the grocery,” said Alvarez. Branches are usually placed facing the cash register so people can stop on their way in or out, he said.

“In many instances people have moved their checking account to those branches … and a number of new checking accounts have been opened as well. We’ve been pleased with those results,” said Primeau.

There are some major differences between supermarket branches and the regular stand-alone branch, he said. First of all, malls generally are open seven days a week, making branches there more difficult to staff. “The key difference is the people working in the branch have to be much more sales oriented because part of their responsibility is to try to attract customers to stop,” said Primeau.

Citizens Bank of Massachusetts is planning to open another supermarket branch at 465 William Canning Blvd. in Fall River by the end of November, said Jodie Silverman, director of public affairs. Of the bank’s 148 branches statewide, 28 are in supermarkets.

Opening the branches, as well as offering Internet banking to its customers, is all part of the bank becoming as convenient for use as possible, said Silverman. “They are extremely successful. Again, I think it goes back to the convenience factor,” she said.

Although the strategy for many banks today is providing the convenience of physical branch in high-traffic areas, Alvarez thinks there will be another sea change in the years to come as a younger generation comes of age.

“I think 10 years down the line it will be very interesting because you will have a new generation that is very comfortable with the Internet. So in five years, the strategy will grow different legs,” he said.