Madaling Kausap. China Bank Savings’ (CBS) tagline says it all, and even explains why the savings bank is launching the in-store branching concept. In line with CBS’ commitment to be truly madaling kausap, it is opening “mini branches” in Savemore Markets, inviting shoppers, passersby, and potential customers from all walks of life: “pag-usapan natin.”
In any business, location is very important. It’s not as easy as “if you build it, they will come.” Being very accessible—opening branches in as many strategic locations and supporting the brick and mortar interface with reliable electronic banking channels—is a proven way to attract and retain customers. But the prevailing low margins and stiff competition have made the overhead costs of an extensive branch network, especially for a new bank like CBS, increasingly burdensome. To cut costs, remain competitive, and still be very accessible to customers, CBS has been beefing up its network of automated teller machines (ATMs), offering customers the option to bank via computer and mobile phone, and now, has restructured its operations, launching a promising concept for a bank branch: the CBS mini branch.
Scaled down but full-service
An in-store branch is a full service mini branch operating in retail outlets like supermarkets or gasoline stations. CBS’ mini branches in Savemore Markets, occupying an average of 25 sq.m. of leased space and manned by two staff and one branch sales and service officer, offer all the products and services of a regular branch, and are equipped with an ATM, a Cash Acceptance Machine (CAM), and an Online Banking Terminal. They are open daily, even on holidays, from 10:00 a.m. to 7:00 p.m., providing greater convenience to customers. On the other hand, banking kiosks, usually located in malls, are not full service branches, and are not officially considered to be branches.
According to CBS President Alberto Emilio “Joey” Ramos, the savings bank aims to increase its footprint in the banking industry, of which branch expansion is key.
“Our mini branches allow us to increase market coverage in key cities at 80% cheaper than traditional branches. Considering that the CAPEX (capital expense) and operating cost are much lower than the conventional bank branch, the payback period is much shorter. Also, our strategy is to be ‘Madaling Kausap’ in our banking operations through the pillar strategies of access, convenience and approachability. The synergy with Savemore enables us to ‘speak’ to our target consumers at a location that is more open and approachable in terms of its operating environment,” said Ramos.
Mini branches can be built and installed at a comparatively low cost—one fifth of the cost of setting up a conventional branch. Operating efficiencies are also achieved, even though a mini branch is open daily and for longer hours as fewer employees are required—only three full-time personnel per mini branch compared to six to twelve for a regular branch. Thus, CBS’ mini branches can attain the same level of profitability as a conventional branch.
“We are projecting that pay back is faster than traditional branch,” said Ramos.
High traffic, big potential
Being madaling kausap, is being close by to talk to and being very approachable.
Savemore Market is a chain of neighborhood grocery stores under the SM Food Retail Group, which includes SM Supermarket, SM Hypermarket and Makro. Savemore outlets are located outside an SM mall to bring the SM shopping experience closer to where shoppers live and work. A broad cross-section of households residing within ten or more blocks of a Savemore Market comes in to shop two or three times a week, thus creating opportunities for CBS to open accounts with and offer services to individuals who would otherwise not enter one of its conventional branches.
“We are counting on the high foot-traffic passing through and shopping at Savemore. To take full advantage of this traffic, we are developing a more retail-oriented culture, and launching area-based promotional activities and even joint promotions with Savemore to generate sales and new accounts,” said Ramos.
Both CBS and Savemore see this new branch concept as mutually beneficial. CBS can expand its market share from the supermarket’s flow of shoppers, and Savemore can expect increased sales as more of CBS’ customers choose to shop at a Savemore Market housing a CBS branch.
CBS ended 2012 with 33 branches. Keen on growing its branch network to reach out to more customers in more locations, the savings bank is looking at a 73-strong branch network in 2013—around 40 more branches this year alone—and 100 by 2014.
The centerpiece of its expansion strategy is the in-store concept. CBS is targeting a total of 16 mini branches. One mini branch, at the Fil Oil Gas Station in Tanauan, Batangas, opened on July 5. Four more are now operational in Savemore: CBS Araneta Center COD Branch, which opened on May 24, and CBS Anonas, Pedro Gil, and Nepa Q-Mart branches, simultaneously opened last July 30.
The initial four mini branches in Savemore were also inaugurated last July 30. China Bank, CBS, and Savemore officers and other guests attended the separate events.
Opening soon are 11 more mini branches in Savemore and SM Hypermarket: Nova Plaza Mall in Novaliches, Taft-Masagana in Manila, Jackman in EDSA-Muñoz, Avenida in Manila, Adriatico (SM Hypermarket), FTI in Taguig City (SM Hypermarket), Acacia Estates in Taguig City, Mezza in Sta. Mesa, Nagtahan in Manila, Camarin in Kalookan City and Visayas Avenue in Quezon City.
Alongside the opening of these mini branches are the traditional CBS branches. Five (5) were opened in the first half of the year, with 10 more in the pipeline. Fifteen (15) Unity branches that will be renamed and converted in the last quarter complete CBS’ line-up of new branches.
The next wave
As the banking industry works toward serving and anticipating the public’s banking needs, wherever they may be, the possibility of branching out to in-store locations is most likely the next big thing.
“Our mini branches reduce our operating costs and enable us to expand our client base while providing greater convenience to our customers. I’m very optimistic about their success and their contribution to the bottomline,” said Ramos.
A press briefing about CBS’ mini branches and the in-store branching concept will be held at the Penthouse of the China Bank Head Office on August 2.