Admirals Bank cut its branches in half and leased a fleet of Mercedes instead. Now VIP customers don’t go to the branch, the branch comes to them.
Armed with iPads, service reps from Admirals Bank drive around making house calls in their shiny new Mercedes. These private bankers zip about town helping clients with just about anything — from basic tech help setting up online banking to heady, strategic issues like estate planning. All services are free.
Customers with $25,000 in deposits or money market accounts of at least $50,000 are eligible for the house calls.
“Customers don’t want to come to the bank branch anymore,” explains Admirals Bank CEO Nick Lazares. “We decided to build a banking experience that reflects that reality.”
The service launched last November with a fleet of three slick black C-Class sedans in Rhode Island. The bank added three more in Boston six months later.
Like many new ideas, Lazares hatched the plan for a luxury banking delivery service by accident. When of his bankers stopped by a client’s home to help set up an online account, she told Lazares that she had to park her car around the corner because it was an older car with some dents on it. Lazares didn’t feel that reflected what his bank’s brand was about. So he leased her a new Mercedes, and two more quickly followed.
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“It’s a formula that can work in certain segments,” Bart Narter, SVP with the market research firm Celent, told American Banker. “Certainly not the mass market, because it won’t pay, but the reality is you don’t necessarily need a branch for this sort of business. All you need is a parking place for your Mercedes.”
This isn’t the first time a financial institution has sent branch staff out on the road. Recently, tiny little Alamo Federal Credit Union ($43 million in assets) rolled out — literally, on four wheels — its Concierge Banking service, putting a banker right at members’ doorsteps.
Now all Lazares has to do it get the Admirals Bank website to match the brand experience he’s trying to create. There’s nothing necessarily wrong with it. It’s just kind of basic and functional — the antithesis of upscale and high end. There are hundreds of mass-market, mainstream retail financial institutions (including a few itty bitty credit unions) with more lavish websites than Admirals has.
With Bankers on Wheels, Branches Get Chopped in Half
Lazares sold Capital Crossing to Lehman Brothers in 2007 just shortly before the investment bank collapsed. Not long thereafter, Lazares saw an opportunity to step back in the high-end banking game, so he bought Domestic Bank in 2010, quickly shuttering the dumpy branches Domestic had inside Walmart and grocery stores. At one point, the bank had as many as 13 branches. Today they have less than half that.
Admirals Bank main branch in Boston has a fireplace to keep its affluent clients warm.
“It’s quite different,” Lazares told Banker & Tradesman. “Fireplaces, chairs, you feel like you’re in a private home or a club.”
Lazares confesses that customers may not visit these Old World banking shrines more than once, but he says they are still a powerful symbol of psychological reassurance. The goal is to inspire trust and security.
“People like to drive by and think, ‘That’s where my money is.’ That’s human nature, and I get that,” Lazares explains. “We have branches for people to visit… we just have three of them.”
Read More: Credit Union Gives Fleet of Cars to Staff
Bespoke Banking Business Model
The idea to deliver banking services from Mercedes sedans may have been a bit of serendipity, but the rest of the strategy driving Admirals Bank is no accident.
Lazares area of expertise is secondary-market commercial real estate loans and strategic home improvement lending — that was what his old bank, Capital Crossing, did before he sold it to Lehman. But regulations have changed since then, and new capital requirements Admirals would need a much more larger pool of deposits than he was used to. That meant running a bigger retail operation.
So after purchasing Domestic, Lazares totally revamped the bank’s business model and shook up its branch network so he could target upscale and affluent clients. If Lazares needed more deposits in his portfolio simply as a backstop for his commercial real estate lending business, he figured he mas as well get those deposits from as few customers as possible. In other words, he was going to build a bank for rich people.
Lazares calls his upscale, high-touch” concierge banking concept “Bespoke Banking” (“bespoke” is a fancy English word meaning “custom,” “tailored” or “made to suit”). And Admirals Bank customers are definitely affluent — the average funds on deposit is $230,000 per client — but Lazares isn’t targeting the ultra-high net worth crowd.
“We are not going after the really big fish,” Lazares told the Boston Business Journal. “If you are a bigwig at JP Morgan, your deposit is probably more like $230 million, and that’s not our sweet spot.”
Under the stewardship of Lazares, the bank has grown from $200 million in assets to over $700 million today. Lazares said he hopes the bank will break $1 billion in assets sometime in the next few years.