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Sunday, 23 August 2015 22:47

PNC Bank renovates branches to fit shifting consumer habits

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PNC Bank has transformed eight Grand Rapids-area offices and one on the lakeshore to prepare to meet the digital age head on and adjust to changing consumer habits.

As retail customers and small business clients increasingly conduct transactions online or through mobile applications on their smartphones or tablets, those who visit a branch office tend to do more than make a quick deposit or withdrawal. By redesigning and adapting the offices, PNC seeks to stay ahead of the changing times.

“In the old model of banking, you went into the branch for the transaction. The branches are really geared for the transaction,” said Sean Welsh, PNC’s regional president in Grand Rapids. “A lot of the transactions are migrating out of the branches, so we’re trying to get us so we can have conversations around what the clients are really trying to achieve.”

“We’re trying to take the client experience and really deepen it and take it much more interactive,” Welsh said. “As things move forward, we feel like this is the way to grow in Grand Rapids. It’s one component of creating a different experience for people that helps build our brand in the market and, most importantly, helps us grow households.”

At the redesigned PNC offices that now use the “branch of the future” or universal model, the company in most instances has replaced the traditional teller windows with concierge stations. They are staffed with cross-trained financial consultants equipped with iPads to do transactions. They can also handle new accounts and personal loans, provide advice on home mortgages or financial planning, or assist customers with other services.

Additionally, the redesigned offices have computers and tablets for customers to use and “smart” ATMs to make deposits or withdrawals or to cash a check.

The effort follows a trend in the industry to redefine the role of bank branches in the digital age while maintaining their relevancy.

“The relevancy still comes with the value that’s inside those buildings,” Welsh said. “It’s all about the people.”


CREATING THE ‘BRANCH OF THE FUTURE’

PNC isn’t alone in that effort, as many banks adjust to the evolving times.

Cincinnati, Ohio-based Fifth Third Bancorp – the market leader in West Michigan – piloted a “branch of the future” model in 2013 at selected offices, excluding Michigan, in its 12-state footprint, testing the use of advanced ATMs and the removal of teller windows.

As tech-driven changes in the industry deepen, Fifth Third Bank is now looking to sell or consolidate about 100 undetermined branch locations and properties previously acquired for new office development.

The move is designed to maintain and grow market share as customer demographics and tastes “are undergoing significant changes,” CEO Kevin Kabat said.

“Technology continues to impact our service delivery and revenue generation tactics and strategies,” Kabat said. “Meeting the evolving preferences of how our customers interact with us is our top priority. Over the past several years, we have made significant improvements to our mobile banking options and our sales and staffing models, and plan to tailor our branch network in concert with these changes. We continue to believe an optimized branch network plays a significant role in meeting the financial needs of our customers, and in delivering an integrated customer experience.”

Fifth Third Bank has more than 1,300 offices in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Pennsylvania, Missouri, Georgia and North Carolina. The bank has nearly 250 offices in Michigan.

In West Michigan, Fifth Third ranked first in 2014 in the Grand Rapids area, with $3.10 billion in deposits through 41 offices and a 23.88-percent market share. Fifth Third was also the top bank in neighboring Ottawa County with a 19.56-percent market share and $755.1 million in deposits through 14 offices, according to the FDIC’s 2014 Summary of Deposits.

Across its footprint, the newest and retrofitted Fifth Third branches are about half the size of what was built five years ago. New office designs are centered on cross-trained universal bankers and smart ATMs that can handle 70 percent of customer transactions faster than a teller.

Despite the rapidly changing landscape, however, bank branches surely are not going away anytime soon.


BANKING ON TECHNOLOGY

A paper the FDIC issued earlier this year concluded that even as more people use virtual banking services to do transactions, consumer surveys show that branches remain a “vital channel” to deliver services to customers. The report found that “visiting the teller window at a bank office continues to be the most common way for households to access their accounts.”

“New technologies have certainly created convenient new ways for bank customers to conduct business, yet there is little evidence that these new channels have done much to replace traditional brick-and-mortar offices where banking relationships are built,” according to the FDIC paper. “Convenient, online services are here to stay, but as long as personal service and relationships remain important, bankers and their customers will likely continue to do business face-to-face.”

Yet that doesn’t mean that branches should operate the same way they have for decades.

The strategy behind PNC’s redesign at eight locations in Kent County and one in Holland is to connect today’s 24-hour banking concept with branches and accommodate a wide spectrum of customers, from millennials who prefer virtual transactions to baby boomers who still like to do their banking in person and from time to time want to sit down with a financial adviser for retirement planning.

“It’s really reflective of what our customers and, hopefully, our future customers are looking for,” said Jim Paul, vice president and market manager for PNC in Michigan and northern Indiana. “That’s the evolvement for us – to create choice for people instead of creating one format that everyone needs to engage with. We do need to be able to service the entire continuum of our customer base.”

PNC ranked 10th out of 25 banks in Kent County in 2014 for deposit market share, according to the FDIC. The bank had total deposits of $375.9 million in Kent County as of June 2014 for a 2.89-percent market share through 14 offices. PNC plans to add a 15th location in Kent County in 2016 with the opening of a new office at Knapp’s Corner.

The Pittsburgh, Pa.-based PNC decided to try the new branch model in Grand Rapids because it’s a growing market that’s “always been accepting and progressive with the changing customer behaviors,” Paul said.

PNC could use its experience in Grand Rapids to deploy the new branch model more broadly across West Michigan.

“You’re going to see this showing up over the course of the next number of years,” Paul said. “We’re moving forward with it.”

Read 8221 times Last modified on Sunday, 30 August 2015 22:39

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