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Sunday, 13 September 2015 20:15

Banks re-evaluate branches as consumers shift to digital banking

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Fifth Third Bank’s planned closure of three branches in West Michigan, part of a far broader plan to jettison 100 of its more than 1,300 offices in 12 states, illustrates the situation banks face in adapting to the digital age.

Retail and commercial customers these days are doing more transactions electronically, either online or via an app on their smartphones or tablets, forcing banks to take a hard look at and possibly redefine their physical footprint.

Some banks, such as PNC Bank, have invested heavily to renovate and redesign offices to accommodate customers still coming into the branches, often for reasons beyond simply cashing a check or making a deposit or withdrawal.

Even in one instance where a bank is expanding its branch network with a new office, the growth of mobile banking technologies will guide its design.

“How we’re going to do things on the inside is an open question yet,” said Art Johnson, CEO of United Bank of Michigan, a Grand Rapids-based company that plans to renovate an existing optometrist office in Jenison for its 12th branch, which will open in 2016.

United Bank wanted to open the new branch to establish a physical presence in the Jenison market, but it’s approaching the design in a way that accommodates changing consumer habits, Johnson told me in a recent interview. Expect the physical layout to be more conducive to the evolving role that branches are taking on, he said.

“You do have to be very electronically connected and you have to be able to offer your products and services when, where and how your customer wants them — not when, where and how they are convenient to us,” he said. “It’s the reason why we haven’t figured out what the inside of this branch is going to look like yet. It’s going to be not as transactionally-oriented as branches have historically been, although we will have a lot of transaction capability there.

“We feel like we have to be more consultative when people come into the branch. They’re going to do their transactions on the phone or at an ATM. They’re not going to make as many visits to the bank branch as they have in the past because they don’t want to and it’s not convenient.”

Recent research from the American Bankers Association shows steady change is occurring in consumer banking habits. In a survey of 1,000 adults, 32 percent said Internet banking is their preferred method to manage their accounts, up from 31 percent in 2014. Additionally, 12 percent of respondents indicated they prefered mobile banking through a smartphone or tablet, versus 10 percent a year ago.

Branch use continued a steady decline as the preferred banking method, falling to 17 percent for 2015 from 21 percent in 2014.

In announcing the survey results this month, an association executive said he expects mobile banking to continue its steady growth for years to come. That continued trend presumably will drive bankers to examine their existing branch networks and how they need to adapt to keep up with the changing times.

As far as the Fifth Third move, branch closings involve offices Hamilton, the Orchard Plaza office in Byron Center, and the Spring Arbor location in Jackson. A Fifth Third spokeswoman said that customer accounts at those locations will move to the nearest office in November.

The branches in Byron Center and Jackson are within two miles of another Fifth Third office, and the Hamilton location is about seven to eight miles away.

Read 3978 times Last modified on Monday, 28 September 2015 11:01

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