Community Banking in a Digital World

Banks transform the branch experience to address digital trends.

By Lorna Pappas, Contributing Writer On Aug 10, 2015

Today’s customers interact with their banks in many ways, including ATMs, call centers, physical branches – and increasingly through smartphones, laptops and PCs. Consumer demand for personalized digital solutions has propelled community banks to focus less on transactions and more on transforming service offerings that meet digitally-savvy customers how, when and where they want to bank. Branches are being repurposed to include integrated digital products and services that deliver a consistent, personalized customer experience across all customer touch points.

Banks must transform or risk insignificance. “By evolving amid digital disruption, banks can avoid the fate of companies that clung to outmoded physical distribution models as their competitors raced ahead with agile digital models,” according to the 2015 North America Consumer Digital Banking Survey Report from Accenture, a business management consulting firm.

Transforming the banking distribution model means re-imagining the branch and investing in in-branch digital opportunities, Accenture states. Traditional branch-based people, roles, processes and responsibilities must focus on delivering experiential outcomes. The branch must become “an interactive, omnichannel hub where customers access the latest banking options.” At the same time, Accenture says, the customer, not the technology, should be the primary transformation driver: “The end game for the new branch experience must be immersive and meaningful customer experiences.”

What does this disruption in the banking experience mean for the thousands of neighborhood branches scattered across New Jersey? Executives from PNC, Lakeland Bank, The Provident Bank and First Bank NJ share their insights, as well as examples of how their companies are responding to new trends in digital banking.

The PNC Money Management Solution Center

“Banking is no longer a place you go, but something you do,” declares Cheryle Russo, retail banking market manager for PNC of Central New Jersey. “Customers now touch us in many different ways. As such, we are evolving our branch system from just processing transactions to providing a mix of services that meet customers at their touch points of choice. We are transforming PNC branches into money management solution centers that showcase our technology, products and services. Customers can have quality conversations about their long- and short-term financial goals, as well as get hands-on demonstrations of how our digital technologies can provide them with banking experiences on their own terms.”

Specifically, by the fourth quarter of 2015, PNC will open a flagship technology solution center in the Mercer Mall that will emphasize all the banking options PNC has to offer, including digital. Consumers in the freestanding branch can walk through PNC’s digital space, including new live apps; and interact with all PNC solution offerings in a single location.

The Mercer Mall branch “will feature technology tables – like an Apple store,” Russo states. “It will serve as a showcase example of the PNC branch transformation to a money management solution center.”

Digital banking now reaches all of PNC’s constituencies, Russo reports. “The adopters and adaptors to this model transcend every age group in our branches: High schoolers as well as grandmothers will be navigating online systems to access financial information in real time.”

Russo, who has been in banking for more than 30 years, says she sees an exciting transformation in how community banks can improve customers’ financial well-being while providing the technology solutions that make it easier for them to bank when, where and how they want to.

Lakeland Makes a Digital Transition

Lakeland Bank has been planning for the digital transition for the past several years, during which the company experienced a 15 percent decrease in branch transactions, according to Ron Schwarz, executive vice president and chief retail officer for Lakeland.

As part of the transition, the company has been working with a national branch design firm to develop a state-of-the-art “branch of the future,” Schwarz says. Among its highlights, the new layout features Lakeland’s digital solutions and privacy areas in which branch employees can consult with customers or prospects about their financial and/or digital support needs. To date, Lakeland has converted four of its 48 New Jersey offices to this new model, and has three more on tap by 2016.

Last year, Lakeland Bank launched a mobile app that allows consumers to “check their balances any time, transfer funds internally, deposit checks remotely, and easily send and receive funds from family and friends using just an e-mail address or cell phone number,” Schwarz explains. “Customers also can set up alerts informing them about account activity such as low balances and large withdrawals.”

This month, Lakeland will introduce a business mobile app that allows small business customers to remotely deposit checks, access account balances and transfer money between accounts. In addition, a recently optimized website provides intuitive technical advancements designed to make mobile and online banking as easy as possible.

As with most banks, a significant customer base still relies on having their needs serviced in person at a physical branch. Therefore, “we recently revamped our branch employee training programs to put more emphasis on technology and our mobile apps so employees can better assist customers face-to-face with technical questions,” Schwarz states. “It is our intent to stay on the forefront of technological advances and make them available to customers on a timely basis. We will continue to provide employees with the necessary training to help our customers with transitioning to and supporting the digital world.”

Provident’s Blended Approach

The Provident Bank also is training its branch staff to handle a broad range of digital and traditional banking needs, not simply transactions, and is driving more services to its digital platform.

“As a community relationship-based bank, we are adopting a blended approach to our digital and physical services,” reports Jack Novielli, executive vice president & CIO for The Provident Bank. “This means we will continue to embrace technology to address customers’ needs and streamline services, as well as continue to offer a physical branch presence to answer customers’ questions or discuss more in-depth topics such as loans and investments that many customers prefer to do in person.”

As the company streamlines its network of 87 community branches (81 in New Jersey), it continues to look at new opportunities, but in smaller, 2,000-square-foot footprints, Novielli states.

In June, the company launched a new mobile-optimized website designed for viewing on any smartphone or Internet-enabled device. Among its features, the site allows users to plan their finances based on “life stages,” including five different personal phases and four business stages.

The Provident Bank also enables direct, two-way customer communications via social media. “We are active on Twitter, Facebook and LinkedIn to continually inform and engage our customers with pertinent and timely content,” Novielli explains. “For example, we feature monthly themes on Facebook geared toward informing, educating and entertaining our audience. Twitter is reserved for community news, events and activities while our LinkedIn groups feature a weekly mix of specialized original and curated content.”

Last year, Provident was listed on the Independent Community Bankers of America’s “Top 50 Community Bank Leaders in Social Media,” based on the bank’s engagement with fans and followers, the content distributed, total number of fans and/or followers, and the frequency of new digital content.

First Bank NJ Seeks to Maintain Personal Touch

First Bank NJ is a smaller institution with 9 of its 10 locations scattered around New Jersey. “We’re fairly spread out, which makes technology that much more important to our customers, especially for the simpler transactions,” reveals Ryan Manville, executive vice president and COO of First Bank NJ. Today, people expect a bank to offer mobile and online banking, just as the ATM is now standard, but once was considered optional, he says. “We will continue to invest in digital technologies and services that provide the best possible customer experiences – but digital is not where we are focusing: These solutions are important, but just another set of tools that help us deliver best-in-class services.”

Most customers bank with First Bank NJ “because they like knowing who we are on a personal level – not just the tellers, but other elements of management,” Manville reports. “They enjoy the personal touch of banking with us face-to-face, and though we do offer digital options, we don’t want to lose the personal relationships we have with our customers, most of whom live in our very own neighborhoods.

“The community branch is here to stay,” he adds. “It’s a very viable consumer and small business banking touch point, and I don’t see that changing in the future.”

A Tipping Point

Accenture confirms that branch banking won’t fade away: In its 2015 North America Consumer Digital Banking Survey Report, Accenture found that only 29 percent of the 4,000-plus US and Canadian consumers polled would use their branches less by 2020; in the future, as many as 66 percent said they would use their branches as often as they do today – or more. At the same time, results suggested that “banks are at a tipping point. Their historically stable customer base could erode steadily if banks cannot deliver the service proposition that customers demand.”

Millennials Prefer the Dentist over Banks

Younger generation has interesting view of banks.

As community banks continue to unleash technologies designed for digital-savvy consumers, they should take a closer look at the attitudes of specific age groups, and then market those tools accordingly.

For example, Viacom Media surveyed 10,000 millennials, a generation of more than 84 million strong here in the US, according to Viacom’s “Millennial Disruption Index” report. Perhaps surprisingly, the survey of millennials showed that:

73%

More excited about a new financial services offering from Google, Amazon, Apple, PayPal or Square than from their own nationwide banks.

71%

Would rather go to the dentist than listen to what banks are saying.

68%

Believe that in five years, the way people access their money will be totally different from today.

53%

Don’t think their bank offers anything different than other banks.

33.33%

Open to switching banks in the next 90 days.

33%

Believe they won’t need a bank at all in five years.