Retial Branch Strategy: How to repurpose the branch network to grow low-cost deposits.
Take a Walk
Let me ask you something. If you walked into one of your branches right now — not as an executive, but as a customer — what would you see?
In most community banks and credit unions, here’s what you’d find: a teller line with one or two people behind it, a couple of desks where someone might be available, a rack of brochures nobody reads, and a whole lot of empty space.
That empty space is costing you a fortune.
Brick and mortar doesn’t come cheap. You’re paying rent or carrying real estate on your books, staffing those branches, heating and cooling them, and maintaining them — all for what? A trickle of foot traffic that gets smaller every year as mobile and online banking continue to dominate transaction volume?
Here’s the thing though. The answer isn’t to close them all. That’s the lazy answer, and frankly, it’s the wrong one.
The answer is to transform them — and in doing so, solve one of the most expensive problems in community banking: the cost of funds.
Let’s Talk About What’s Really Broken
News flash. Community banks and credit unions across the country are watching their branch traffic decline, and they’re responding in different ways.
Brett King, a prominent financial futurist and author of Branch Tomorrow, argues that the decline in branch traffic and deposits is an irreversible trend driven by mobile technology, stating that the “nails are in the coffin” for traditional banking branches.
Some banks are closing branches. Some are selling them in bank M&A deals. Okay, fine. Sometimes that’s the right call. But many of these same institutions are also watching their cost of funds creep up as they compete for deposits by raising rates on CDs, money markets or treasuries. They’re replacing low-cost, loyal, relationship-based deposits with expensive, rate-sensitive, transactional money that will bolt the second a competitor offers a slightly higher APY.
That’s a slow bleed.
Others are doing the opposite. They are clinging to branches like they’re sacred ground, refusing to reconsider what happens inside them. Same old layout. Same old functions. Same old declining relevance.
Neither of those approaches solves the real problem.
The Real Problem Is a Missed Opportunity
Here’s what too few community bank and credit union leaders are seeing: their branch network is a distribution system — and right now, they’re distributing almost nothing.
Think about it. You already own or lease that space. You already have staff in those buildings. You are already a trusted, known institution in that community. The infrastructure is THERE.
The question isn’t “what do we do with these dying buildings?” The question is: “What do the businesses in our community desperately need that we have the platform to provide — and that no big bank would ever bother doing? How can we capatilaze on my local business banking ecosystem?”
Those are the kinds of questions that change everything.
Recommendation: Turn Your Branches Into Business Banking Hubs
I’ve spent over two decades in retail banking, and I’ve seen this work firsthand. What I’m about to suggest isn’t theoretical. We implemented versions of this at multiple community banks, and the results were unmistakable — lower cost of funds, deeper relationships, raving fans, and deposits that stayed.
Here’s the core idea: Repurpose a meaningful portion of your branch footprint into small business service hubs
Places where local business owners can come to meet clients, hold team huddles, access technology, attend workshops, and connect with other business owners in the community. Not a WeWork. Not a co-working space you charge for. Something far more powerful than that.
A community business center — offered free or at extremely low cost — exclusively to your business banking clients.
TRUE STORY — The Conference Room That Changed Everything
Years ago, at a community bank where I served in a senior retail leadership role, we had an underutilized branch on a busy commercial corridor. The foot traffic was light, but the surrounding area was full of small businesses — contractors, consultants, real estate professionals, insurance agents.
We had a conference room in that branch that sat empty for roughly 80% of the business day.
We started quietly offering it to our business clients with no charges, no gimmicks. Just “Hey, do you ever need a professional space to meet a client or hold a small team meeting? We’ve got a great space here, free of charge, no fees, and it’s yours to use.”
The response was immediate. Business owners LOVED it. Why? Because a lot of them were running their operations out of their car, a home office, or a coffee shop. Walking into a bank conference room with their client made them seem like a VIP. They got to pitch and close deals in a real, professional, polished setting. It changed how they were perceived. It changed how they felt about themselves, and it change how they viewed their relationship with us. We were no longer a bank. We were part of their strategy.
The best part of all, was that the clients started meeting and doing business with each other.
The contractor met the accountant. The accountant met the realtor. The realtor met the insurance agent. And suddenly, we weren’t just a place that held their money. We were the place where their network grew. We were the hub of their business community.
We were the business verision of “Cheers“, where everybody knew each other’s name.
Referrals started flowing. New accounts followed. And every single one of them brought their operating accounts — their low-cost, high-balance, sticky business checking deposits — to us.
That was not a coincidence. This was part of our intentional strategdy.
Why This Grows Low-to-No Cost Business Deposits
Business checking accounts are among the most valuable deposits a community bank or credit union can hold. Why? Because business owners typically maintain higher average balances, they churn less than retail customers, and they are relationship-driven — meaning they don’t leave over a quarter percent on a money market rate.
The catch is that business owners choose their bank based on trust and perceived value, not just rates and products. They’re asking themselves, consciously or not, “Does this bank actually understand my world? Do they add value to my business beyond just holding my cash?”
When your branch becomes a place where a business owner can meet clients, host a small workshop, or get introduced to their next best vendor — you have answered that question with a resounding yes.
You have moved from being a commodity to being a partner.
And partners don’t get shopped. Partners get referred.
Every business owner you serve at that hub becomes a walking, talking advertisement for your institution. They tell their accountant, who tells their clients, who tells their vendors. The economic ecosystem I describe in my book Banking on Service doesn’t just happen at a theoretical level — it happens in your branches, with your staff facilitating the connections, if you’re intentional about it.
What This Looks Like in Practice
Here’s what a repurposed branch business hub could actually include:
A professional meeting suite. Clean, well-branded, technology-equipped — available to business clients at no charge for client meetings or team gatherings. This alone is a game-changer for the solopreneur or small business owner who works remotely.
A monthly Business Owner Roundtable. Hosted by your branch manager or a business development officer. Invite 8-12 of your business clients to sit around a table and discuss what’s working, what’s hard, and what they need. You’ll learn more about your market in one of those sessions than in a hundred cold calls. And your clients will leave knowing three new people who can help them.
Financial literacy and business workshops. Bring in clients to host seminars. A CPA to talk about tax planning for small businesses. Invite an attorney to walk through succession planning. Partner with your local SBDC or SCORE chapter. These events don’t cost much and they position your branch as a destination, not just a transaction point.
Intentional introductions. It starts with bank staff training — I mean really train them — to make introductions between clients who could help each other. The teller who knows that one client owns a landscaping company and another just bought a commercial property shouldn’t just process transactions. They should connect those people. That’s not overstepping. That’s community banking at its finest.
What About Compliance and Risk?
I hear this every time. And yes, there are considerations. Get your legal and compliance team involved early. Document your processes. Make sure your introductions and referrals are handled appropriately and consistently. That’s not a reason to avoid this — it’s a reason to be thoughtful about how you execute it.
The banks I’ve worked with that implemented relationship-based connection strategies had clients who were eager to sign the necessary consent forms. Why? Because the value was obvious to them. Nobody pushes back on something that genuinely helps their business.
If your clients are successful, your bank will be successful.
That should be on a bumper sticker. That’s the entire forgotten business model of a true community bank. When a bank spends it resources on imporving its relationship with its existing clients (taking measurable actions) it prooves its loyalty to its base, and that loyalty is rewarded.
The Branch Isn’t Dead. Its Original Purpose May Be.
Let me be direct: the problem isn’t the building. The problem is the clinging onto what the building used to be and what used to happen in it.
For decades, branches were designed to process transactions. That era is over. Transactions happen on devices now. The branch that tries to compete with an app on speed and convenience will lose every single time. And the banking client who needs face to face interaction are growing fewer and fewer
But the branch that transforms into a community business resource center — a place where local business owners get genuine value, meet each other, grow their networks, and feel genuinely supported by their financial institution — that branch becomes irreplaceable.
No app does that. No mega bank does that. Only you can do that, because you’re here. You live here. Your staff lives here. This is your community.
Do you have the courage to rethink it?
Because the community banks and credit unions that ask that question first — and answer it boldly — are going to look back in five years and wonder why they ever let those buildings sit half-empty.
The ones that don’t ask it will be looking at lease termination notices.
The choice, as always, is yours.
