Shrinking banks are branching out

  • Article by: ARIELLE KASS , Atlanta Journal-Constitution
  • Updated: July 23, 2013 - 5:14 PM

From video tellers to more personalized ATMs, banks are experimenting with how best to serve their customers in the digital age.

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Keith Hardy, a branch manager at a PNC Bank in Atlanta, showed customer Mari Fridenmaker details on accounts by using an iPad. Though more people are doing their banking electronically, they cite easy access to a local branch as a key factor in choosing a bank.

Photo: KENT D. JOHNSON • Atlanta Journal-Constitution,

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As more people do their banking on computers, tablets and mobile devices, trips to the local bank branch are increasingly rare. Still, convenient branch access remains the top reason people select a bank.

Many banks are therefore in the midst of a balancing act when it comes to their branches. They’re questioning how the old, neighborhood bank coexists with evermore technology.

Different banks are making different choices, but all expect that branches will change.

“If we can put a branch in their briefcase, then we don’t need to have an office on every corner,” said Mike Fitzgerald, executive vice president and chief revenue and deposit officer at State Bank & Trust in Atlanta. “We don’t need you to come to us for anything.”

Still, Fitzgerald said, anyone who says that the bank branch is dead is shortsighted.

So banks are experimenting with a variety of options, many in combination. They’re adding ATMs with video screens, letting customers talk to live tellers from afar. The video tellers are more efficient, and allow banks to stay open later. They’re personalizing ATMs, to help customers track their withdrawals. They’re installing large, touch-screen devices, or sending bankers in front of the counter, armed with tablet computers to help customers navigate the new technology. And they’re redesigning the space itself, to make branches smaller and better use the space.

Certain customers prefer to do their banking in person. And there are some tasks — like opening an account — that people overwhelmingly do at a branch, even if they’re given the option to do it online.

That’s because before people trust someone with their money, they want to interact with them in person, said Steve Reider, president of Bancography, a bank consulting firm.

But once people open an account, they’re not inclined to spend much time at the bank, he said. The median number of transactions at a bank has declined by 26 percent in the past five years. In 2007, there was an average of 10,200 transactions in a branch each month, Reider said. In 2012, that number was 7,600.

That lessened use is one of the reasons bank branches are shrinking in size. A decade ago, the median size for a bank branch was 3,900 square feet. Now, it’s 2,950 square feet. Fewer transactions means less of a need for tellers, and long teller lines. Fewer visits means banks don’t need as many large offices. Ever-improving technology also plays a role in the changing size.

Different approaches

Brand Bank, in Lawrenceville, Ga., is testing a hub-and-spoke model, where small branches with video ATMs that connect customers to live tellers in call centers fill in between full-service branches. Wells Fargo is opening smaller, neighborhood branches with a more open layout in some markets.

PNC Bank has plans for a mobile pop-up branch that can move from one location to another. New PNC year-round branches in the market may also look markedly different from existing ones. PNC President and CEO Bill Demchak envisions a PNC of digital branches, with no safe and no tellers. Instead, people will use multifunctional ATMs to access their cash, or tablet computers to do their banking.

Branch employees will be technology guides, Demchak said, and will be capable of working with customers on topics such as wealth management and business banking.

In banking, customers rapidly adopt to new technology, said Tom McDermott, senior vice president of retail sales and channel executive for Atlanta-based SunTrust. But McDermott is wary of self-service banking.

“Clients don’t want to be forced. They will rebel,” he said of banks that push customers away from branches in favor of self-service options. McDermott said 60 percent of SunTrust’s small business clients still visit the branch monthly.

He thinks, though, that more touch points for banking will be a good thing.

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