For One Credit Union, Growth is The Icing on The Cupcake

A look inside Patelco CU's shared branch with Sprinkles bakery, dislaying the cupcake shop and a teller pod.
A look inside Patelco CU's shared branch with Sprinkles bakery, dislaying the cupcake shop and a teller pod.

In a recently published article, featured Ameet Seth, senior vice president and head of delivery channels, investments, and membership development for Patelco CU (headquartered in Dublin, CA): Visitors to the Patelco CU branch in San Ramon, CA can now have their cake and eat it, too, thanks to a unique partnership that has brought the credit union and the famed Sprinkles bakery under the same roof.

The pairing is part of a slowly building “co-location” trend that has seen credit unions share retail spaces with not just bakeries, but coffee shops, restaurants, retailers, and more. Those arrangements allow participating credit unions to not only share facilities’ costs but provide additional exposure to non-members who visit the partnering business, and in some cases even earn non-interest income.

For Patelco ($8.8 billion — headquartered in Dublin, CA), the road to co-location began in 2019 after Ameet Seth, the credit union’s head of delivery channels, examined the branch footprint and determined that the two San Ramon, CA locations just weren’t working.

“We wanted to consolidate those branches to serve our members more effectively and needed an all-new space to do that,” he said. “It’s in the newly built City Center. It’s like their version of a downtown with shops and restaurants.”

The two branches Patelco previously operated in San Ramon had posed a unique set of challenges that could only be addressed by starting over in a new location, Seth says. One branch had operated out of a single suite in a business building once occupied largely by AT&T, the parent company of Patelco’s original sponsor Pacific Telephone & Telegraph, or PacTel. Most of the building has since been occupied by other businesses as AT&T has consolidated operations over the years.

The credit union’s main branch in San Ramon had operated in the Crow Canyon area, which was becoming more isolated from the newer developments and higher traffic shopping areas of the city.

Branches are Not ‘Just Transaction Centers’
Patelco has seen declines in in-branch transactions and loan activity in recent years, and while most credit unions saw this kind of decline and attribute it to the industry's movement away from branches, Patelco has a different approach to its physical branch network.

“For us, (branches) are even more relevant. We don’t view them as just transaction centers,” said Seth, who explains that Patelco’s branches are places to meet members for financial counseling, help with lending, hosting seminars, and providing financial education. “We are heavily focused on how we can drive more engagement with our members.”

After closing the SEG location in 2020, Patelco focused on relocating the Crow Canyon branch to a place that would be more beneficial in the long-term. The credit union reached out to developers who were beginning to construct City Center, a shopping complex that mimics a downtown in what is a sprawling network of towns in the East Bay area of San Francisco. City Center already had commitments from anchor retail giants such as Williams and Sonoma, along with the Nike Store. Patelco told developers they wanted to create an open floor plan with community space for people to gather and feel comfortable staying a while; a place where conversations could be had instead of people walking in and out for a quick transaction.

What Patelco wanted was a cafe-like environment, and that’s when developers suggested a partnership Sprinkles, which also had expressed interest in opening a City Center location. Patelco reached out to the cupcake company, whose casual dining environment and strong social media presence were seen as a complement to what management hoped to create for San Ramon-area members.

Cash and Cupcakes On-Demand
The vision for better service involves cash machines, community, and cupcakes.

The 5,400 square-foot space may seem large for a new branch with just two teller pods, but the idea is to be much more than just a branch. Thirty percent of the space is intended to be used as a branch, with another 30 percent dedicated to an open, shared lobby for the two businesses where the credit union can also provide educational workshops. The remaining 40 percent is occupied by Sprinkles, which began in Hollywood in 2005 and has since spread its cupcake love nationwide, with 22 locations coast to coast.

The shared space in Sprinkles’ first Northern California location. Patelco is the primary lease-holder, but Sprinkles subleases nearly 2,200 square feet from the credit union, which provides additional non-interest income.

Along with teller pods, the branch also has two ATMs — one to dispense cash while the other provides freshly baked cupcakes on demand.

Each business makes the most of its own expertise, adds Seth, and those individual strengths make the partnership successful.

“They are not experts in financial services and we are not experts in cupcakes,” he explains. “But while their customers are enjoying a cupcake, they’re having conversations about Patelco. It’s a really good partnership.”

Aside from the enticing aroma of fresh cupcakes and warm frosting, the new space provides something more for everyone.

“It’s the community piece that we truly believe in. This is the missing piece in San Ramon. Similarly, our members can come in and slow down and enjoy the space, instead of just coming in for a transaction and leaving.”

Examining the Concept for Other Locations
Seth admits it’s a partnership that works for Patelco in San Ramon, but not necessarily at its other branches. He says Patelco is open to examining the concept for other branches, but even with the initial success over the past year, it’s too early to tell if the concept will translate to different locations or with different partners.

“We have no shortage of opportunity,” said Seth, “the question is always capacity.”

Since its opening last year, Patelco has seen a 75 percent increase in new members at this location and a 30% increase in branch transactions. He says a lot of that growth has come from the better location and visibility in San Ramon over the previous two branch locations. However, Seth attributes the success in large part to the partnership with Sprinkles.

“Could it have worked with a burger shop or pizza place? Probably not,” said Seth. “The idea of their brand allows people to want to stay for a while. For us this partnership worked well from the very beginning.”

Quick Facts: Patelco CU
Patelco CU (as of June 30, 2022):

  • Headquarters: Dublin, CA
  • Assets: $8.8 billion
  • Members: 446,000
  • Branches: 37
  • 12-month share/deposit growth: 2 percent
  • 12-month loan growth: 9 percent
  • Return on assets (ROA): 0.68 percent

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