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Think Outside the Branch

By: Toni Lapp

Admittedly, I’m not an early adopter of technology. I check my account balances using my tablet, but I have not yet deposited a check with my smartphone. Give me time; it’s going to happen. When it does, I’ll have one less reason to visit my local bank branch. Even though I go there less frequently, I still like knowing that it’s nearby. Is that sufficient reason for a bank to maintain a branch?

According to research by Sanford C. Bernstein, it’s not. In a study of bank branches, Bernstein estimated many regional banks could cut costs by identifying branches holding below-average deposits and merging those with nearby branches. Bernstein estimated the average annual cost of running a branch at $1.7 million. But a recent survey of community bank executives indicates that the majority expect to keep the same number or even increase their branch presence.

For a while now, the demise of the branch has been predicted. Mobile and online banking is on the rise, while foot traffic into brick-and-mortar locations is declining. 

A few years ago, a flurry of in-store branches opened at grocery stores, but by 2013, the number was declining, according to SNL Data.  “There's a Wells Fargo mini-branch at my local Safeway,” one observer commented. “The only time it's guaranteed to have traffic is payday.”

Wells Fargo is now testing “minibranches,” borrowing Apple’s concept of stores with open floor plans, staffed by roving salespeople able to help with a variety of transactions.

Big banks are not the only ones working on creating a new model. Pioneer Bank, a $750-million asset bank with 17 branches in upstate New York, is exploring an evolved branch that blends retail activities with financial services — a one-stop shop where a customer can buy stamps, print documents and cash checks.

On the other side of the country is Roseburg, Ore.-based Umpqua Bank, which has rapidly expanded to 364 branches and $22 billion in assets. Its branches display local products and host yoga classes. Tellers hand out chocolates with cash withdrawals — not a bad incentive to generate foot traffic.   

These are just a few ways banks can reinvent their branches.

In a future issue, BankNews will showcase branches that are rising to the challenge of a shifting landscape. What changes are you implementing at your branches to adapt to changing consumer behavior and technology? We would like to hear from you about your experiences — good and bad.


Survey Says

Branch structures are in flux, says a survey by Pacific Coast Bankers’ Bank of community bank executives. When asked about their staffing plans over the next five years, 45 percent of respondents said they expect their branch to have more branches than now, 38 percent expect to have the same number and 17 percent expect to have fewer.

When asked about anticipated staff levels, 34 percent said they planned to increase staff, 27 percent said they planned to stay the same and 39 percent expected to decrease.