What mix of technology and branches do bank customers want when it comes to accommodating their convenience and comfort needs? An ever-growing number of mobile and computer-related tools have opened more rapid and accessible ways to handle bank customers’ personal and business assets. But the traditional networks of branches that have been a major feature of bank business models for a long time continue to have a place, with many customers who still feel more comfortable conducting their transactions in branches – though to a far lesser extent than in years past.
A major shift to new service channels is not just an anecdotal notion. Angela Snyder, chairwoman and CEO of Fulton Bank of New Jersey and NJBankers first vice chairwoman, cites a study that found that while transactions at branches fell 30 percent in recent years, digital/mobile transactions rose approximately 33 percent.
While such statistics certainly reflect a change in behavior by retail bank customers, according to James Vaccaro, president and CEO of Manasquan Bank and NJBankers second vice chairman, they reflect something even more important to many bank business customers. “All businesses are looking to utilize their resources more efficiently using tools like remote deposit-capture, rather than coming to the bank, as being one obvious example. They can complete transactions in a more time-effective manner.”
There is a widely held view that younger customers, especially Millennials, are the main drivers of more bank technology use rather than older, “less tech savvy” generations. Experts in the field tend to disagree, however, though with some caveats.
Frank Sorrentino, chairman and CEO, ConnectOne Bank, says he believes it isn’t demographics that are changing the banking system, which is working toward fully integrating new technologies into its operations. He feels that the change is primarily being brought about by the way people now think.
“A bank used to be a place, now it’s a verb,” he says. “Many payment sources have gone mobile. Not only cash is disappearing. There’s even less need to use credit cards.”
He doesn’t see this change as being just age related. “Sure, kids have an iPhone when they’re only eight, so many people talk about this [move to more banking technology] as being about Millennials. But I see it as a mindset. Just look at Facebook statistics. More older sectors are using new social media sites. ‘Everyone’ is getting in on it; every age group can use technology to its full extent … it’s not just age related.”
Sorrentino uses the term “frictionless” to describe why new technologies are increasingly favored over older ways. The banking delivery model options allow two-way communication and a better overall experience. “The frictionless way is the way the entire economy is headed,” he says. “It’s not just at banks.”
“I agree with Frank,” Snyder says. Changing customer preferences are driving how services are delivered. All age segments of the market are accepting more technology though different channels are required to meet different needs. “Banks must invest in these new delivery channels or be left behind. A bank can’t just offer one digital experience,” he says.
Of course, Snyder – and bankers generally – realize the important role brick-and-mortar branches still play in their business. “Just as with a retail purchase, a potential customer [of a banking service] might explore online, then come to a branch and speak with a person to actually make the purchase. Branches and online transactions each have their place. Moving forward, we have to constantly analyze the data to meet these different needs,” she says.
While acknowledging the growing popularity of technology-based service channels at banks, especially with certain age groups, Vaccaro emphasizes the continued importance of branches to many bank customers. “Many of our long-time patrons prefer the traditional ways of doing things, and you don’t want to disenfranchise these legacy customers,” he says.
“The branch banking environment is the cornerstone of community banking. Some types of business that we transact are just better conducted on a person-to-person basis,” he continues.
While the need for branches remains, this doesn’t mean branches themselves will not evolve. “We’re planning to open new branches and to renovate our existing network,” Vaccaro says. “The updated presentation will look and feel very different from traditional branches with an open floor plan and architecture. The introduction of universal bankers – multi-skilled banking professionals – will accompany the new look. These branches will also be smaller than traditional branches. We’re going from approximately 3,000 square feet to 1,800 square feet. This is a trend that is consistent throughout the industry,” he says.