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Why Chase Killed WaMu’s ‘Occasio’ Retail Concept

It’s been known for months that JP Morgan Chase planned to replace Washington Mutual’s innovative retail branch design with a much more traditional model. Now that the changes are actually being implemented, the failed thrift’s approach to branching is again being called into question.

In a recent Wall Street Journal story, Charles Scharf, the CEO of JP Morgan Chase’s retail financial services unit, said traditional branches “are superior in every way.”

Wrong. Just because WaMu collapsed does not mean its branch design was inferior. That’s a fallacious, oversimplified inference (something The Financial Brand pointed out earlier this year).

Reality Check: Chase’s branch model isn’t superior to WaMu’s. Using Scharf’s own words, Chase branches are more accurately described this way: “They might be boring, but they’re practical.”

“Traditional branches are
superior in every way.
They might be boring,
but they’re practical.”
— Charles Scharf,
CEO/Chase Retail Banking

WaMu rolled out its retail branch design with great fanfare in 2000, and used the new model as they moved into new markets such as Las Vegas and Atlanta. Later they remodeled existing branches to incorporate the new retail features. Before WaMu collapsed last September, they had spent roughly $1 billion on a branch-building binge.

Key Questions: Why would Chase want to spend millions undoing everything WaMu had taken $1 billion and 8 years to accomplish, despite a company-wide push to cut costs? Why would Chase basically drag the WaMu branches back to the past?

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Actually, from Chase’s perspective, the argument to overhaul WaMu’s branches makes sense. For starters, it’s obvious why Chase would want to sanitize branches of all evidence linked to the largest bank failure in history. It’s also clear why Chase would want to standardize operations and create a consistent brand experience with one, basic branch delivery model.

But the real reason Chase needs to remodel WaMu’s branches is that the two banks had totally different business strategies.

It boils down to these two fundamental differences: (1) Chase offers small business, and (2) Chase offers private-banking services. WaMu never did.

Operationally, these two components of Chase’s business model necessitates branches with certain elements. WaMu branches branches were never designed to accommodate merchant services, nor did WaMu’s branches provide the degree of privacy required for a highly-consultative private banking audience. That’s because WaMu was a retail bank. Chase may offer retail financial services, but it’s a commercial bank at heart.

WaMu, as retail bank, was quite successful…at least from a branding perspective. The thrift did everything it could to distance itself from other competitors in the crowded retail financial space. It ran ads touting how WaMu was different as they made fun of bankers. They changed their name from Washington Mutual to WaMu.

WaMu new who it was and knew how to build its brand. That meant coming up with their own branch design and breaking away from traditional branch offices donning stark decors and staff tucked safely away behind bullet proof glass.

Which is exactly what WaMu did when they introduced their “Occasio” branches. Occasio locations were stylish retail operations that didn’t feel much like a bank at all. They did away with the traditional teller counter and windows. Customers were greeted by a concierge, and dealt with tellers at free-standing “pods” that resembled tall bar tables.

Occasio broke down not just the physical wall between customer and teller, but also a psychological wall. It put the service rep side-by-side with the customer in a casual, conversational atmosphere. And without ever making security an issue.

Latin for “favorable opportunity,” Occasio became such a symbol of pride for WaMu’s brand that they trademarked the name and got a patent on the branch design, reportedly the first patent for a store concept in history.

The branding was brilliant. The business model (risk management notwithstanding) also made a lot of sense. Occasio branches were designed to be high-speed transaction centers — no waiting, no lounge, no sofas, no chairs for tellers necessary. No need to sit down. Get in, get out.

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WaMu’s branches took in a high volume of retail deposits to fuel their home lending operations. WaMu handled home lending through regional offices. (With big, one-time purchases — like a home loan — consumers are a lot more willing to drive 20-25 minutes). WaMu’s low-cost transaction centers helped them achieve their business objectives by feeding regional lending offices in a hub-and-spoke system.

Bottom Line: WaMu’s branches worked…for WaMu. Chase is talking up their more traditional branch design because that’s what they know and what works best…for them. Every financial institution needs to find its own unique branch delivery model — one that compliments their brand and business strategies. That means carefully engineering an experience while balancing your privacy and security concerns.

Further Reading: John Ryan, one of the world’s leading financial architectural firms, published a blog post about Chase’s decision to kill WaMu’s branches just yesterday.

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  1. It’s true. The WaMu brand had a lot of fans in the Northwest. The Seattle Times has had many stories on WaMu since last October, and after every one, there are people bragging about how long they were WaMu customers…reminiscing about “The Friend in the Family” slogan…noticing what they call “an obvious change in service,” bitching about how the service has gone downhill since Chase took over.

  2. Jeffry,

    One of the greatest lessons to learn from this decision (IMHO) is to merge with link-minded organizations. I know in WaMu/Chase’s case it was forced, BUT many credit unions “seek merger partners” for the wrong reasons. Just to grow assets.

    I think of mergers as blended families. Like the Brady Bunch model. You have to work through your cultural differences – you can’t just plop everyone under the same roof and think they’ll get along.

    When a credit union that serves autoworkers (for example) merges in hospital employees and then teachers – the result? Defections. You busted up three clubs to try and make one generic one – and that’s all you can hope to get – Generico FCU. Just because you merged the accounts does not guarantee you’ll KEEP those accounts.

    I think it is a huge mistake to bust up the WaMu branch model. Especially in the Pacific Northwest where I think there still is some love for the WaMu brand (read – the great people on the front line).

  3. Erin Evans says:

    I have done a lot of work with WaMu over the past 9 years across the country. One of the things I loved about working with them is how innovative they were from an in-branch sales perspective. The employees I had the opportunity to work with were innovative and passionate about their jobs. They cared about their customers.

    It was really sad to read of Chase dismantling the Occasio branches – that was another aspect of their organization that really made them stand out.

    I think a lot of FI’s underestimate the value of their brand and branch design and the impact it can have on their constituents!

  4. @Staid Banker – As noted here at The Financial Brand previously, queuing was indeed a problem with Occasio branches. Many financial institutions using teller pods find themselves with queuing problems. But that doesn’t have to be a problem. WaMu created no queuing lane(s) or queuing area. Why? Seems like an obvious oversight.

    As far as performance goes, it would be helpful to see numbers. Where is there data that we can review?

  5. staid banker says:

    Just my two cents, but I fully disagree with your comment that WaMu’s branches “worked…for WaMu.” While I don’t necessarily agree broadly with Charlie’s comments about traditional branches, the data pretty clearly suggests they they are in every way “superior” to Occasios.

    The reality is that Occasio branches dramatically underperformed other traditional branches–including WaMu’s!–in markets where they were built with regard to gathering retail deposits. The “innovation” in queue management was also a disaster: if you’ve ever been in a WaMu at lunch hour you’ll know that lines form for the tellers AND the cash machines, with confusion abounding.

    Finally, WaMu’s cross-sell rates were among the lowest in the industry; hard to say that constitutes the “favorable opportunity” WaMu espoused…

  6. staid banker says:

    Commercial banks and thrifts are required to report data on deposits by branch to the FDIC/OTS on an annual basis. It’s really the only publicly-available data on individual sales performance, but since the majority of retail banking profits come from deposits it’s a good starting point. The last time WaMu reported was June ’08, and you can find the results here:

    The major Occasio markets (Chicago, Atlanta, etc.) are good starting points.

  7. Interesting. Those Chicago numbers are pretty weak. Did every branch in Illinois end up with an Occasio layout? I wonder what the average square footage for those locations were? And didn’t WaMu inherit someone else’s branch network in Illinois? I wonder how the branches performed prior to WaMu taking them over.

    The analysis kind of breaks down when you start looking at other markets. There were a few Occasio branches in Seattle that I were looking at with close to $100 million in deposits.

    And there’s still questions about cost and timing. How much will this end up costing Chase? And is now — after a merger and in the middle of a financial crisis — the right time to make a lot of changes? As folks have pointed out, there were many loyal WaMu customers, and these folks may defect in even greater numbers than anticipated as a result of an aggressive transformation. I wonder if Chase factored a higher-than-average rate of defections into their calculations?

  8. For another analysis of Chase’s move, see this article here at CBC’s The Story.

  9. Wamu Customer says:

    There is no way I will go with CHASE.

    Why would I do that if I know from the past experiences with them – that they stole so much money from me!

    They sent me a check for $100 to open account with them, I did not fall for it.

    Would never do it no matter how much they offer. The stress and pain they cause by taking the money out of your account whenever it suites them is — unexplainable.
    It is 5/8/2009 and I am shopping for another checking account with some other non-stealing bank.

    Wamu was wonderful. The best bank ever! They took care of me… they were consistent and always looked what is best in my interest.

    I had a manager in my location who would alert me by calling me to add the cash BEFORE he would charge me any fee. I don’t remember when did I pay any fees with WAMU.

    CHASE was just the opposite…… they did everything to take as much money from you at all times.

    I had accounts with other banks and CHASE took over so I —- stupid —- stayed with CHASE believing they will take care of customers.

    OMG what kind of things I experienced with them, it is undescribable.
    Never ever again I will put myself through that pain, ever again!

    So I finally closed all my CHASE accounts 2 years ago and went with WAMU – and will never repeat that horrible experience.

    Why would I allow them to use my money to get richer while they slam me with fees and always managed to go around it ( no rules )… so you end up paying and they end up re-inventing another excuse for taking another $30 fee from your hard working money!

    Never in my life would I give them a chance to use me that way again!!
    People please come to your senses. CHASE is the worst bank you can have business with. Do not help them by staying, I wish WAMU survived and CHASE vanished!!!

    WAMU deserved to be of service to us. It was great bank.

    Sincerely — you would be insane to go with CHASE. There must be another non-stealing bank to pick from!!!

    By not staying with them CHASE will have no choice but to either change their stealing habits or they will vanish.

    This is our moral duty… not to help stealing banks to use us to get richer.
    But to give a chance to smaller banks like WAMU to survive and carry on the good work and great service.

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