Roughly two decades after the first in-store bank branch opened here, the banking strategy of putting branch offices inside grocery stores remains strong in the Spokane market, say those in the banking industry.


Its a symbiotic relationship that continues to work well for both financial institutions and retailers, by providing banks and credit unions with good foot traffic from grocery shoppers and giving stores additional patrons with direct access to spending moneyas well as lease payments from the institutions.


I couldnt be more pleased, says Don Young, community bank president for Wells Fargo Bank, which operates branches in two Safeway Inc. stores in the Spokane area. Our strategy is to provide financial services to our customers, and in-store branches help us do that. In-store banks are a key proponent to Wells Fargos national strategy.


In-store bank branches first appeared in the U.S. in Phoenix in 1972. Their numbers gradually fell in the late 1990s and early this decade as part of a movement by the banking industry to reduce costs and de-emphasize bank branching, says Jerry Silva, an analyst at Tower Group, a research and consulting firm based in Needham, Mass. Then, says Silva, new surveys found that about 93 percent of a sampling of 4,500 bank customers said they had visited either an in-store or stand-alone banking branch within the previous 30 days. Thats when banks began to reinvest in new branches again, Silva says.


The majority of banks contacted for this story say they offer virtually the same services at an in-store branch as they do in a stand-alone bank.


There are dozens of grocery stores in the Spokane area with in-store bank and credit union branches, though not one grocery chain has a banking establishment in every store. Grocery chains with banks in some of their outlets include Safeway, Tidymans LLC, Yokes Washington Foods Inc., Albertsons Inc., and Rosauers Supermarkets Inc.


Another retailer that hosts in-store banks is multiline retailer and grocer Fred Meyer Inc. All of its five branches in the Spokane-Coeur dAlene market include Washington Mutual Bank branches.


I think we help each other. It is mutually beneficial, says Mike Motzer, senior regional manager here with Washington Mutual.


When asked how an in-store bank fits in with the marketing strategy of a grocery store, Mike Davis, president of Tidymans, says the area where Tidymans can place in-store branchesnear the front of its storeusually isnt a good place for the grocer to merchandise its own inventory.


In addition to Washington Mutual and Wells Fargo, financial institutions that operate in-store branches here include Farmers & Merchants Bank, Inland Northwest Bank, U.S. Bank, First Bank, Global Credit Union, Numerica Credit Union, and Horizon Credit Union.


Although many financial institutions did not wish to discuss the particulars of their lease arrangements with grocers, Mary Starkey, senior vice president of operations for Global Credit Union, says that lease payments for the in-store branches Global has here at Yokes and Tidymans range from $850 to $1,200 per month. Those figures can go up depending on the amount of assets the credit union handles at a respective in-store branch, says Starkey.


The size of in-store branches can range from 400 square feet to 1,500 square feet.


One bank here that dropped in-store branches after trying them is Spokane-based Washington Trust Bank. Washington Trust opened branches at four different stores with four different grocery chains in Spokane and North Idaho in the 1990s, but since has closed them.


We found that most in-store transactions were only cashing checks, depositing funds, and withdrawing money, says Karen Oakes, senior vice president and manager of the retail division of Washington Trust. Our niche as a bank is to develop relationships with customers, and we found that hard to do in an in-store setting. It didnt give us the opportunity to develop a relationship with our customer base.


AmericanWest Bank also opted out of the in-store banking strategy. It had operated branches in four Rosauers locations, but ceased operations at the last of the branches by early 2002.


Tim Cassels, executive vice president and chief financial officer at the Spokane-based bank, says AmericanWest withdrew from the stores because of a lack of profitability of such operations and a decision that customer relations could be developed better in a sit-down atmosphere at a brick-and-mortar bank.


AmericanWest was replaced at the Rosauers at 10618 E. Sprague by Numerica Credit Union. Jennifer Lehn, a Numerica executive vice president, says that credit union has an excellent relationship with Rosauers and has been able to team up with the chain on promotional events.


In-store banks normally employ, on average, six to eight people. They often stay open longer hours than a stand-alone bank.


Farmers & Merchants Bank began in-store branching with three Tidymans locations in 1997 and has since opened four additional branches in local Safeway stores and one in an Albertsons.


Because the Tidymans store on Lyons Avenue is located three blocks from a stand-alone bank Farmers operates, the bank will merge that in-store service into its nearby branch soon.


Yokes has in-store banks in 10 of its 12 area stores in the region. It makes a whole lot of sense for both the financial institutions and ourselves, says Denny York, senior vice president of Yokes Foods.