Banking Outside the Box
Technology is in, but bank branches aren’t out of style, not among Alabama banks.
Photo courtesy of Regions
National news reports have bank branches disappearing from American street corners by the hundreds, with 20 percent gone by 2020. The need to cut expenses, increased federal regulation as a result of the financial crash of 2008, and ever-improving technology are blamed for the demise of the friendly place where you stand in line to deposit your paycheck and the teller knows your name.
If the reports and projections are true, it isn’t happening in Alabama, according to officials of several major banks here. Yes, some branches will close, but finding a branch will still be easy. Developing technology is bringing new bells and whistles, but bankers still want to talk to their customers.
“What’s really occurring is the banking industry is moving to a little bit thinner network than before from a bank branch standpoint,” says Scott Peters, head of consumer services for Regions Bank. “The reason we can do that is 1) there is a branch within striking distance for a customer who wants to go in person or get consultation and guidance from the banker and 2) we’ve added a lot of technology for them to do simple things.”
In the last two years, Regions closed 162 branches across 15 states, or about 10 percent, Peters says. But most were consolidations, because they were located “very close” to another branch. Bank purchases and mergers sometimes leave branches across the street from each other, he says.
Regions is reinvesting the money saved by consolidated branches into new branches in St. Louis, Atlanta, Houston and New Orleans, where Regions is spread “thinner than we would like to be.”
In Alabama, Regions branches in Trussville and Vestavia Hills are being updated or replaced, as is the headquarters in Birmingham. The updates incorporate Regions’ universal banking center philosophy, in which teller lines are eliminated and employees are cross-trained to provide multiple services. Having tellers and bankers doing different things is no longer efficient, Peters says.
“The majority of customers still report that they go in a branch at least once a month,” he says.
Bryant Bank plans to open another location in Tuscaloosa and recently established a new main office in Huntsville, says Chief Operating Officer Elizabeth Allen. Bryant also recently opened a branch in Orange Beach.
“We have no plans to close our branches,” Allen says. “We’re not trying to remove the branch experience from our customer base.
“We like to know our customers,” Allen says. “We like our customers to have the opportunity to know us as well.”
Bryant emphasizes community involvement and markets itself as being a bank for Alabama, Allen says. She is aware of the industry trend toward closing branches but says Bryant is unique in that it isn’t doing the same.
Larry Franco, executive vice president of retail banking for BBVA Compass, says the branch-closing trend mainly affects much larger banks or banks with multiple branches that are close to each other. BBVA is not that big.
“Last year we actually closed about 4 percent of our branches. It equated to 27 total branches,” Franco says. “The branches we closed were in-store branches located inside of grocery stores. In all of those cases we made sure that there was a full-service branch in close proximity to those locations.”
There are no plans to close more branches, he says. Franco’s own career began in a grocery store branch, and he says that people have used them less and less as technology offers more options after normal banking hours.
For ServisFirst, founded in 2005, branch banks aren’t much of an issue. “Our business model from Day One was not to be a mass retail institution,” says Chris Robbins, senior vice president of private banking.
With 70-30 percent mix of commercial to retail business, ServisFirst simply doesn’t need many branches and never invested in a large network. There are three branches total in Birmingham.
“We aren’t all things to all people. We’re a simple bank,” Robbins says. Nor does ServisFirst have the potentially expensive layered software networks that may be clunky or outdated but still in use by larger banks.
Banks that do have a large branch network are dealing with competition for traditional services such as auto loans from credit unions and other sources, Robbins says. The recession reduced the demand for home equity lines of credit, and the new tax law eliminates interest deductions on second mortgages. Also, younger people are more familiar and accustomed to using technology.
“If you look at someone in their twenties, and now their thirties, they’ve grown up on the technology,” Robbins says. “They’re comfortable with it. They have the smartphone deposits, which is another reason you don’t need to go to the bank.”
Regardless of what they’re doing with their branches, Alabama bank officials are concentrating on making their services accessible. For example, ServisFirst may not have many branches, but it does have free ATM service that rebates customers’ fees from other institutions’ ATMs. It offers free checking accounts, interest-bearing checking accounts and free bill pay, Robbins says.
“We do a few things very well, as opposed to a lot of things average,” he says. “We find most of our clients are busy professionals. They don’t even go to the bank. They have someone else that will run to the bank for them.”
Online banking, ATMs with more services, apps that let someone take a photo of a check on a smartphone and deposit it and other new ways to do traditional banking have become commonplace. New services are constantly evolving.
ServisFirst can place remote deposit machines in businesses so that someone can feed in checks directly, replacing the traditional large deposit bank run that takes an employee out of the office for what may be an extended period.
Regions, conscious of the importance of security in new technology, recently started offering Regions Lockit, a mobile app that lets customers lock down their bank credit and check cards when they aren’t in use. The app can lock online, ATM or in-store transactions, essentially turning their cards on and off, Peters says.
Video ATMs are another innovation being installed as older Regions ATMs are replaced, allowing face-to-face options.
“We certainly believe at Regions that it’s not an either/or, that you just have to use technology or just have to use the branch,” Peters says.
Franco, of BBVA Compass, says one study showed that two-thirds of all customers want all services that are available. It has installed digital banking units inside banks that customers with a portfolio can use to interact with an expert banker assigned to them. That banker is also available through text, email or telephone.
The bank’s Blue Maverick program serves older customers with trained tellers and branch managers who will do mobile demonstrations for people who want to learn a skill such as depositing a check with a phone. BBVA is also training employees to perform multiple tasks so that someone coming into a branch only needs to deal with one person.
BBVA’s Houston banks responded to Hurricane Harvey last year with two mobile ATMs that moved around the city as needed when branches were closed by heavy flooding. BBVA also increased limits for deposits and withdrawals temporarily so that customers with a large FEMA check, for example, didn’t have to wait to make a deposit.
While Robbins says that in the long run, a small customer may not be the most profitable one for a bank like ServisFirst to seek out, Alabama banks remain committed to balancing technology and face-to-face service.
Says Franco, “One thing that hasn’t changed is that people still select and stay with their bank based on one thing, and it’s typically convenience.”
Jane Nicholes and Cary Norton are freelance contributors to Business Alabama. She is based in Daphne and he in Birmingham.