Anyone still declaring the death of the bank branch must not be paying much attention to Webster Bank. When Citibank announced its withdrawal from the Greater Boston market, the Waterbury-based Webster pounced, snapping up the 17 empty branches Citi left in its wake.
With more than $24 billion in assets, Webster wasn’t exactly hurting for resources to invest in tech, but its move to acquire those old Citi branches speaks volumes about the importance of the physical branch in an increasingly digital age.
“We’re not in the game of forcing [digital banking] or dictating how people interact with us, so we think that over time, basic transactional stuff certainly continues to migrate digitally and out of the branch,” said Greg Jacobi, Webster’s director of distribution and customer experience. “But what we also see is, as people go more digital and are self-serving, they end up needing to have those bigger conversations and still want to connect with a banker.”
Webster is hardly unique in seeking a balance between the physical branch network and the suite of digital self-serve options. Customers have increasingly migrated toward online and mobile banking for day-to-day needs and as foot traffic to branches has fallen off, banks have looked to reshape the branch to meet those needs.
Bankers building new branches today tend less toward the traditional teller line and more toward high-tech, high-touch branches that maybe look a little bit more like an Apple store. The branch of the future is smaller, typically, and it’s not uncommon to see the tellers evolve into a universal banker, free-floating and assisted by an automatic cash recycler for more routine transactions.
Mark Charette, CEO of the Hartford-based branch design firm Solidus, said he first had the chance to introduce some of these new elements of branch design about eight years ago, but those trends have really taken off in the past couple of years.
“Change is a big impediment,” he said. “Bankers are a little bit more apprehensive about the impact of changing a branch and what that might do for their existing clients.”
But in spite of the industry’s characteristic resistance to change, he said this sort of branch redesign is typically received very well.
Charette likens the changes in the bank branch to a similar shift he sees happening in the retail world.
“It’s really all about varying distribution channels. Obviously, you want to be active in electronic banking, offering up apps on smartphones … but branches are part of that whole story. It’s not unlike what you see with Starbucks. Starbucks has their standalone stores, they have kiosks in the airport, they’re on the shelf at the local grocery store,” he said. “It’s about using varying distribution channels to serve your clients and banks are already moving in that direction.
Charette is not the only person to note that parallel between banking and retail, of course.
“The same evolution we’re seeing in the retailing world, with Amazon versus, say, Target, we’re seeing in the banking world. People still very much want both,” said Martin J. Geitz, president and CEO of Simsbury Bank. “In the case of the banking world, what people are looking for more than ever from their bank partners is the advice and knowledge and expertise that they can get face to face with somebody when they have a more complicated need.”
Simsbury Bank is currently in the process of making over a bank branch it acquired last year as part of its expansion plans into the West Hartford market. Geitz said the bank liked that market for its potential to capture deposit and mortgage business, and since West Hartford skews younger, the branch needed a refresh.
Geitz said the new location will occupy a smaller footprint and will incorporate many of those aforementioned new branching trends to better present Simsbury Bank as a modern and technologically up-to-date bank.
“It’s a challenge to banks big and small because the surveys we’ve seen – and I think our numbers are fairly consistent with what we’ve seen on the national averages – over the last 20 or 30 years, branch transactions are down 50 percent,” said Michael Rauh, president and CEO of Chelsea Groton Bank. “But at the same time, when you ask customers what’s important to them, having a branch that’s close to home or work is important.”
Rauh said that Chelsea Groton Bank has been engaged in its own internal dialogue about its future branch plans. He said that thinking about the branch’s relevance in the future raises questions about the reasons people still visit a branch when self-serve options are available.
He remarked, “As a bank, you’re faced with this dichotomy where many people use them less frequently than they did, if they use them at all, and yet they’re still important.”