Banks Re-evaluate Branches as Consumers Shift to Digital Banking

by Edward O'Brien 0

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.

The topics of the changing role of branches, banking customers’ desire to increase their use of digital banking, and how best to manage the convergence of branch and digital banking are important topics for banking leaders. These changes will only accelerate with the introduction of new branch concepts that include a broader selection of self- and assisted-service options for users, and more digital banking choices.

Overview by Ed O’Brien, Director, Banking Channels Advisory Service at Mercator Advisory Group

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