Ohio-headquartered
Huntington Bancshares has partnered with retailer Giant Eagle to
expand its distribution footprint, and kicked off a two-year, $70m
branch upgrade programme. Charles Davis talks to Huntington senior
vice-president Cindy Keitch about the bank’s ambition to become the
biggest bank in its home state.
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Signalling a
recovery from a tough 2009, Huntington Bancshares has posted
consecutive profitable quarters and launched an aggressive new
thrust into Ohio grocery stores.
In a move designed to take
market share in its backyard and build a broader base of
revenue-generating customers, the Columbus, Ohio-based bank
announced that it had agreed an exclusive 15-year partnership with
Giant Eagle.
The partnership will produce
seven-day-a-week, full-service branches in at least 103 Giant Eagle
supermarkets across the state. That would bring Huntington to
nearly 500 outlets in Ohio, making it the state’s largest bank as
measured by branches.
Huntington will begin the
programme by building branches in 26 Ohio Giant Eagle stores that
previously did not have bank stores, starting in October and
continuing through 2011. Branches will also be added in two Giant
Eagle stores in West Virginia.
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By GlobalDataHuntington said it would also
install branches in any newly built Giant Eagle supermarkets in
Ohio, and it will replace all existing bank branches in about 75
Giant Eagle supermarkets upon the expiration of existing bank
branch agreements. Rival US Bancorp has more than 20 branches in
Giant Eagle supermarkets.
The tie-up with Giant Eagle
coincided with a separate branch investment programme announced by
Huntington: a $70m, two-year programme to refresh its existing
branch network.
Huntington has appointed
senior vice-president Cindy Keitch to lead its new in-store
distribution channel and exclusive, 15-year partnership with Giant
Eagle. With more than 30 years of experience in financial services,
Keitch has a broad background encompassing nearly all aspects of
banking throughout Huntington’s Midwest markets.
“Convenience is the
number-one reason customers choose a bank,” Keitch told
RBI.
“This is not only about
convenience for existing customers, though. It is also about
creating new household relationships. A Giant Eagle store gets four
or five times the traffic a normal bricks-and-mortar branch
gets.”
About a quarter of the new
supermarket bank branches will be open by the end of 2011. The rest
of the branches will be opened over the next 15 years as the leased
sites become available, Keitch said. The partnership promises to
make Huntington among the largest, if not the largest, in-store
branch banks in the country.
The move will give Huntington
a bigger presence statewide and a much larger footprint in key
metropolitan markets, especially Cleveland, where it will add about
45 branches and nearly double its locations there. Giant Eagle is
the largest grocer in northeast Ohio in terms of
locations.
Customer-centric
institution
Huntington has made several
changes in an effort to expand its retail banking market and
position itself as a customer-centric institution.
In February, it began a
programme aimed at increasing small-business lending in the
Cleveland area by offering $360m in new loans to local companies.
And in September, the bank eased its overdraft policy, allowing
customers a 24-hour grace period to cover overdrafts on their
accounts.
Now Huntington is betting
that bank outlets within grocery stores will quickly catapult the
company’s stature across Ohio and position its bankers to engage
and recruit a range of new customers to cross-sell a ran2ge of
retail banking products to.
“This is about acquiring new
customers as much as servicing existing clients,” Keitch
said.
“We are driven to grow
existing relationships, while finding new ones. And we see
tremendous opportunity in cross-selling to existing
customers.”
The expansion is a relatively
inexpensive way to ramp up its branches. Huntington estimates that
an in-store branch will cost the company about one-tenth of what
the bank pays to build a traditional branch.
It is also a smart, scalable
investment in limited bricks-and-mortar expansion at a time when
physical branches appear to be on the decline
nationwide.
Recovering from inflation and
looking to cut costs while also delivering more services online,
many banks have begun to trim their branch totals or scale back
plans for new branches. The total number of active branches in the
US, as of 13 September, fell to 98,533 from 99,161 on June 30,
2008, according to data from the Federal Deposit Insurance
Corporation (see page 6).
Huntington is widely
recognised as one of the most innovative US banks in terms of
online banking, but in-store branches, if staffed with energetic,
sales-driven people, could prove an important way to engage an
array of potential new customers, given that most people find
themselves in grocery stores in a typical week or month, who can
then be steered toward online banking.
In fact, the two types of
outlets also can complement each other. For example, it is not
uncommon for a customer who typically uses a traditional branch to
be in need of closing a loan but because he or she is travelling
cannot do so during the week. Now, more customers will be able to
do weekend business at in-store branches, completing business that
began online.
Huntington’s in-store
branches will be open 8 am to 8 pm, Monday to Friday; 8 am to 5 pm,
Saturdays; and noon to 4 pm on Sundays.
“We will have bankers out in
the aisles, helping people find the coffee aisle, find the deli,”
Keitch said.
“Our model will be to really engage on a daily basis with
Giant Eagle customers, and not just push products. We feel that
being there, 75 to 80 hours a week, we will begin to become a part
of the store.”
