When John Loury deals with his bank, he rarely does so at a branch.
“Almost all of my financial activity is done outside of the bank, and done online or via mobile,” said Loury, an account supervisor at SKM Group, a marketing communications agency in Depew.
It has been that way for Loury for about four years. And since he commutes to his job from his home in Rochester, the digital method suits his lifestyle fine.
“Working at an ad agency, I often don’t have time to go to lunch,” he said. “But I still have to pay my new mortgage, I still have to pay all the utility bills, and I can do that from my mobile phone. And I can take five minutes at my desk versus taking 20 minutes to go to a branch, stand in line and then have to drive back.”
Across the country and in Western New York, banks are adapting to customers like Loury. With ATMs, call centers and digital options, banks have made it much easier for their customers to bypass branches. But this explosion of convenience is resulting in some branch closings and prompting banks to rethink how to capitalize on their brick-and-mortar networks.
Local bank leaders insist branches are not going the way of video rental stores. In fact, bank officials say there is great value in having a physical presence to attract and retain customers, as well as meet with them face to face. “Branches are still at the center of our strategy and will be for a very long time,” said Scott Fisher, First Niagara Financial Group’s managing director of retail channels.
Even so, experts predict the number of branches nationally will keep dropping, and that branches of the future will likely be smaller. Their layout, and the job descriptions of employees inside of them, are changing, too.
Banks say their other methods, like mobile banking, are complementing branches rather than replacing them. Although fewer customers are lining up at teller windows, banks say branches are still revenue engines and ideal places to discuss more complex matters, like mortgages, saving for college or big-ticket purchases.
The eight-county Western New York region had 449 branches as of last June 30, the most recent data available from the Federal Deposit Insurance Corp. That was down 4 percent from 468 in 2007, when branch-building was cresting. From the start of 2013 through last Monday, a net total of 14 branches closed in Erie and Niagara counties, according to SNL Financial.
Nationally, banks closed more branches than they opened in the first quarter of this year, which kept up a trend that lasted through all of 2013, according to SNL. Banks are much pickier about committing to new branches, mindful of the cost of building, maintaining and staffing them.
Closing a branch is never an easy decision, said Timothy J. McMorrow, group vice president and retail marketing manager at M&T Bank. “We look at everything and then we agonize over what’s the right thing to do,” he said. In making those decisions, the bank considers not just transaction trends, “but what else is going on in that community and that branch. There’s a lot to it.”
Sometimes, branch overlap drives consolidations. In 2012, KeyBank acquired 37 branches that HSBC had owned in Buffalo and Rochester before exiting the upstate retail market. But many of those HSBC locations were within a half mile or a quarter mile of existing KeyBank branches, so KeyBank will close 10 of its Buffalo-area branches starting in July.
Statistics drive home what the banks are up against. A Bankrate.com report said three in 10 Americans had not visited a bank or credit union branch in at least six months. A Financial Management Solutions study last year said branch transaction volumes had declined more than 45 percent since 1992. And a recent Accenture study found nearly 40 percent of North American consumers ages 18 to 34 would consider switching to an online-only bank.
Greg McBride, chief analyst at Bankrate.com, said banks built “way too many branches” during the boom years of 2000 to 2006. Now they are coping with less customer traffic at those locations, he said.
As a result, McBride said, many banks are weighing which branches to keep as they try to control costs. “A lot of this boils down to how effective a branch is at bringing in new deposits and opening new checking accounts,” he said.
McMorrow, of M&T, said banks need to adjust to how customers want to do business with them. “It’s evolving so quickly, at our customers’ direction, to evolve more into a high-profile sales center where people can come and get the advice they need. I think it’s just picking up speed.”
The bank can use branches to talk to customers in greater depth about things like financial plans, said Sam Guerrieri, senior vice president and chief executive officer of M&T Securities. In the past, he said, those conversations often began when someone would just drop in. “Now that the branches have less traffic, it allows us to schedule appointments where it’s more controlled time that we have with people.”
A new challenge is drawing people into a branch for those meetings. M&T has launched a program called “Find 59,” offering customers a free financial review in just under 60 minutes.
Loury, the SKM employee who rarely uses a branch, can relate to the idea of trying to boost branch visits. One of SKM’s clients is Oregon-based Umpqua Bank. SKM’s promotional materials for Umpqua mention the bank’s signature blend of coffee, suggesting customers come in for a cup or two to talk financial services. “They are trying to re-establish the bank as a meeting place,” Loury said.
Other banks also see branches taking on new identities. Fisher, of First Niagara, sees them becoming “knowledge centers,” where customers go for quality advice about investments.
Evans Bancorp’s CEO David Nasca pictures a branch of the future as a “financial center.” The next office Evans opens, he said, likely will not have a teller line, but will probably offer more interactive technology as well as more professional sales and service people staffing the place.
Nasca believes the shift to a new-style branch will be gradual. “I don’t think everybody’s just going to flip the switch one day and we’re going to go from what is the old-time branch that we’ve seen to this new-level branch,” he said.
Fisher said First Niagara has seen a 7 percent drop per year in teller transactions in its branches. In light of that trend, the bank has consulted with an architectural firm about what its branches should eventually look like. Among the ideas generated were creating a setting with more comfortable, inviting spaces, with roundtables and chairs to meet with customers.
Banks’ changes to their branches are not just about layout. Their employees’ jobs are changing, too.
Fisher said First Niagara over two years has gone from zero to 500 “universal bankers,” which refers to employees trained to handle multiple tasks, beyond the duties of a teller. He credits the leaders of his branches with helping steer the locations in a new direction. “They embrace change, they understand need for it.”
Beyond computerized tellers
McMorrow, of M&T, sees changes at the branch level creating new job opportunities. “I think it’s exciting for the tellers, because it invests them more into the whole process. The position, whatever we end up calling it at the end of day, becomes more critical. And it’s got to be more satisfying.”
Some financial institutions are mixing in technology to stay connected with customers at a branch, while keeping costs in check.
Meridia Community Credit Union, based in Hamburg, last week opened a 1,500-square-foot branch in Eden equipped with two “personal automated tellers.” ATM users can see and talk to a teller at the Hamburg main office. Two employees also work at the small Eden branch, for tasks like opening accounts and taking loan applications, during traditional working hours. The tellers on the ATM screens are available longer, plus for three hours on Saturdays.
Meridia opened its first of this style of branch in 2010 and liked the results, said Michael Hoffman, the president and CEO. “There’s the blend between the personal touch and using the technology to get things done.”
For all of the visions about new branch identities and technology, there are those who appreciate the old-fashioned branch.
“I know everybody here because I’ve had a checking account here since I was about 10 years old,” said Martje More, at an M&T branch in the Elmwood Village. She likes using the branch for withdrawals and deposits.
The branch, tucked between a church designed by a man who died on the Titanic and a yogurt shop with a cow statue named Gurtie, was a busy place on a recent Friday morning. Some customers popped in just to use the ATM at the front door. Others huddled with employees in the branch’s office cubicles. At the commercial teller window, Kyle Mack was chatting with an employee after a transaction.
“I’m in here twice a week, so me and the teller know each other,” said Mack, co-owner of Cantina Loco in Allentown.
Todd A. O’Geen, the branch manager, greeted customers by name as they strolled through the door, and picked up a pizza delivered to the branch to mark an employee’s last day. O’Geen sees the branch as a community hub, and he understands its appeal to customers.
“They want that comfort level,” he said. “They want a face.”
Some things are hard for computers to replace.