As banks and credit unions worldwide are trying to determine the right branch distribution strategy, Virgin Money is having success opening branches that don't offer banking services. Enjoy this photo tour of Virgin Money’s tellerless ‘Money Lounge.'
Instead of adding to its 75 location branch network it acquired from Northern Rock in 2011, Richard Branson’s Virgin Money brand has recently opened the doors to its fourth Virgin Money Lounge, in the heart of London’s ‘Theatre District’. Available exclusively for the use of Virgin Money customers, the Lounge is intended to offer customers and their guests a memorable experience in attractive and comfortable surroundings.
Working with lead design agency and concept originator allen international, each of the Virgin Money Lounges are unique. For instance, the London location includes a ‘sky lounge’, complete with Virgin Atlantic first class seats and airplane style ‘windows’ (nice cross-promotion) where customers can recline and take advantage of an ‘in-flight entertainment system’. There is also a traditional ‘red London telephone box’ where customers can make calls and a children’s area including books, art materials and a games console to keep the kids entertained while customers relax.
The Virgin Money Lounge
Before you think that these lounges are similar to other banks’ efforts to create a more comfortable environment to do banking, the Virgin Money lounges do not have teller counters or any of the traditional ways for customers to do their everyday banking. There is absolutely no attempt made to sell banking services in the Lounge. Instead they offer customers free WiFi access and use of iPads, free refreshments, daily newspapers and magazines, a space to watch television and even grand pianos. According to allen international, a ‘customer capture’ strategy was enabled with the ‘relationship lounges’ complementing the retail bank branches which have also been redesigned.
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If customers enquire about banking services they are put in touch with the right team by the in-Lounge concierge. Customers are also welcome to use dedicated phones, computers or Lounge iPads to manage their Virgin Money products online or by phone.
The Lounges also offer a work space for customers, with informal areas available for customers looking to hold a business meeting. As part of Virgin Money’s community focus, Lounges are also available free of charge for after-hours community events like exhibitions, talks and book signings. The Lounges are open 7 days a week.
Jayne-Anne Gadhia, Chief Executive at Virgin Money, said: “Our Lounges are places where our customers and their guests can relax, and where local communities can meet. For over forty years Virgin has been going into established areas of business and showing just how much better things can be. We’re aiming to do the same for banking – to build a new kind of bank, one that people want to be part of.”
Not surprisingly, customer reaction to the Virgin Money Lounges has been overwhelmingly positive. But getting positive feedback has not come cheap. According to Virgin Money, the expansive Lounges cost about £750,000 each to set up and about half of that in annual running costs. Virgin plans to open two more Lounges each year with a long-term aim of eventually having Lounges in a dozen key cities across the UK. Virgin Money is currently spending about £3m a year on the concept.
In an interview with the Financial Times, chief executive Gadhia justified the expense of the lounges, saying they triggered a substantial increase in sales in local branches. She said Virgin had recorded a 200 per cent uplift in sales at branches that were located near one of its lounges. “We continue to invest in building our customer service capability, such as the creation of Virgin Money Lounges, in the knowledge that by so doing we will drive customer advocacy … and drive down the cost of marketing to attract new customers,” she said.
Virgin Money works with specialist design consultants developing each Lounge concept and working through every detail. A lot of time and effort goes in to finding the perfect locations for the Lounge concept, with bespoke designs to complement each building. In November 2011 Virgin Money opened their first Virgin Money Lounges in Edinburgh and Norwich, with the third Lounge opened in Manchester before the just opened Lounge in London.
Virgin Money Lounge Onboarding Experience
To gain access to a Virgin Money Lounge, you not only need to have an account with Virgin Money, you need a membership card. At a time when people value their privacy, but also want a personalized experience, the 3 step onboarding process for Virgin Money Lounge membership is unique and refreshing.
Very soon after applying for membership to the Virgin Money Lounge, I received the email below confirming my registration, reminding me of what I would need to enter the Lounge and reinforcing their commitment to the community and the availability of events at the Lounges.
If Virgin Money Lounges continue to pop up around the UK and are successful at driving business to banking offices, this may be a viable alternative for some of the bank branch real estate that is currently underutilized in the UK or the US. While the costs are high, adding a relaxed community gathering place for customers of a bank or credit union may be the differentiation some organizations are looking for.