Unprecedented, unexpected, uncertain — the buzzwords used in 2020 to describe the pandemic are now the words many people are using to describe the costs and other challenges related to construction projects. Any type of uncertainty is often a reason consumers — and business leaders — take a “wait and see” approach.
After 18 months of “waiting and seeing,” we’re now seeing more financial institutions coming to the table with an “ASAP” mindset and seeking quick action on branch building and other physical network investment projects. Whether you’re in the “wait and see” or the “ASAP!” camp, there are key considerations you need to make to be sure your investments are in the best interest of your business, your brand, and perhaps most importantly, your customers.
‘Wait and See’ … And Risk Getting Left Behind
The Covid-19 pandemic forced financial institution leaders to wrestle with tough decisions, including if and how to proceed with capital investments. While many chose to wait, an analysis of financial institutions’ actions during and immediately following the Great Recession of 2007 to 2009 showed that those who approached the economic downturn as a catalyst for action and adaptation came out of the recession on a solid footing for sustainability and growth.
Those who didn’t invest in growth initiatives were more likely to struggle or be merged and acquired.
Today, we’re seeing many behavioral parallels. Hindsight is 20/20 and the reality is that while some banks and credit unions were in a position to make investments throughout 2020, the majority took the “wait and see” approach. Many of the institutions that waited are now ready to act. However, they’re facing significant challenges including inflation and a long line of other organizations (within and outside of the banking industry) that are similarly looking to invest. That pent up demand is having a major impact on the industry.
If you’re ready to build or renovate, rebrand, refresh and/or overhaul your branch technology, there are some key things we urge you to consider.
Expediency Can’t Trump Strategy
For financial institutions feeling the urgency of pursuing their previously delayed building or other network refresh projects, it’s important that remember expediency doesn’t trump strategy.
With news of soaring construction prices, supply chain demands and labor shortages, it is natural to focus on the bricks and mortar and dollars and cents of a project, but financial institutions would be ill-advised to let these elements alone drive their path forward.
There is a human element to the services that banks and credit unions provide.
Path to Success:
The goal of any major network investment should be to bring an institution’s mission, vision and brand to life in a relevant way for the marketplace and for consumers. If there isn’t a clear connection to those elements, a branch project will not be worth the investment.
The key to ensuring a project is worth it is to do a thorough analysis to identify the true needs and opportunities available and vet out the best way to capitalize on them.
Done well, the analysis that happens before branch renovations, relocations or network additions tells you if the opportunity for growth is real, and if it is worth investment.
Once the analysis is done however, it is time for fast action. Construction costs and material availability is changing rapidly. In this climate, banks and credit unions pursuing a building project need a partner that can provide real-time intelligence and a quick pace that adapts to the changing market to minimize unnecessary cost increases.
For these reasons, and many more, financial institutions can and should carefully consider their vendors’ abilities, looking specifically at the agility of their design, architecture, construction and technology partners and how much they know about one another’s trade.
In today’s economic climate, it is more apparent than ever that bringing all these functions under the same roof with a design-build partner is likely the best return on investment.
Collaboration Keeps Costs In Check
When starting with an independent architecture/design firm, it could take months to develop and sign off on a concept that then must be brought to the marketplace for material and labor pricing. With current inflation rates, that decentralized approach could mean a 5% to 10% increase in costs and likely more back-and-forth negotiation and budget reconciliation.
A design-builder, however, addresses those issues in real-time, incorporating market conditions into the actual design and can even procure commodities at earlier stages in the process.
What it Looks Like in Practice:
Having all functions of a project under the same roof and working together, on parallel tracks, provides a more robust understanding of a project and its needs quite early in the design process.
That means that before a design is even final, a design-builder can begin to procure key building materials like steel, precast concrete and glass. Doing so at an early stage in the process saves clients money and gives them a more comprehensive and accurate idea of total project cost and timeline.
The inherent collaboration within a design-builder means they can also design a project around current-state availability of materials and supplies. They can look at copper, lumber, paint and more and let that information determine next steps and influence design work. As an example, bar joists are needed for standard roofs in commercial buildings. In recent months, bar joists have been back-ordered, resulting in a timeframe that is out of line with most customers’ expectations.
Knowing that upfront, a design-build firm can pivot and find new, innovative ways to design without bar joists — using precast concrete or industrial steel, for example. They do this both by leveraging supplier relationships and finding what is available in the desired timeframe.
It comes down to collaboration — not only between the owner and the design-builder, but also within the design-build process. With a design-builder, the process happens under one roof and often around one table, allowing for challenges to be identified and mitigated upfront and with a great level of transparency.
Build More Than Walls — Build Experiences
To be a player in what is a complex financial market, you must create an engaging, relevant experience for your customers. That means extending your considerations to the “why” behind the bricks and mortar of your branches or operations centers.
While digital screens and technology are increasingly being placed at the center of creating engaging experiences, simply having the tech is not enough. It’s the combination of the technology, architecture, branded design and communications fueled by a deep understanding of retail design trends and consumer financial behaviors that makes the difference.
Together those things create meaningful and memorable journeys through your branches.
What Sets the Best Apart:
Financial institutions that leverage their consumer insights to develop rich content and create mission-driven, brand-centered environments and experiences are the ones today’s consumers are seeking.
When you have the right framework in place, adapting to market trends, consumer needs — or even global pandemics — is quicker, more comprehensive and, as a result, more relevant. Relevancy to your customers matters and can be the driver of creating memorable first impressions that lead to interactive experiences and, ultimately, long-term loyalty.
Whether you’re considering a building, updated branding and/or technology refresh, current construction industry trends and what we’ve learned from past recession recoveries indicate that time is of the essence. But “acting now” doesn’t mean starting with a sledgehammer. Rather, analysis and strategy — and the right partner to help you navigate a fast-changing landscape — are the best tools to start the job.