If one relied solely on banking industry data reports, it would seem that the days of bank branches are numbered.
The number of U.S. bank branches that were open for business peaked at the end of 2009 with 99,564, and has been in decline ever since. By the end of 2015, the Federal Deposit Insurance Corp. reported 93,283 branches in operation, the lowest level in a decade. And a forecast issued last month by PricewaterhouseCoopers predicted there will be at least 20 percent fewer branches for the nation’s largest financial institutions by 2020.
While many branches around the nation are being closed, online banking has been on the rise. A recent study by FI Navigator and Celent found 57.1 percent of U.S. banks and credit unions offered a mobile banking app; 85.7 percent of financial institutions with more than $100 million in assets offer mobile banking.
In another study released this month by the Mercator Advisory Group, 65 percent of respondents said they were performing banking activities by smartphone or tablets, up from 60 percent in 2015 and 58 percent in 2014. And the percentage using a mobile device for transactions including bill payment, check deposits and funds transfers reached 45 percent in 2016, up from 41 percent in 2015 and 36 percent in 2014.
Millennials were found to be nearly twice as likely to prefer smartphones for their online banking rather than desktop or laptop computers.
This region has not been spared branch closures. Most recently, Waterbury-headquartered Webster Bank announced in January that it plans to close its Scarsdale and Danbury branches this spring, although the company opened 17 branches in the greater Boston area during 2016. Webster maintains 24 branches in Fairfield County and eight in Westchester County.
In October 2014, First Niagara closed five of its branches in Fairfield County. First Niagara was acquired by KeyBank in 2016, which resulted in the closure of 106 branches in four states, including 15 branches in the Hudson Valley. But Ken Raskin, KeyBank vice president and area retail leader of New York City, Westchester and Fairfield, noted that many closures were the result of market overlap between First Niagara and KeyBank branches.
“We had a case in Mount Kisco where two branches were within three or four storefronts of each other,” he said. “In a case like that, it didn’t make sense.”
KeyBank now operates 12 branches in Westchester and eight in Fairfield County. While it has no plans for more branch openings this year, the company is open to considering expansion in the near future. “We absolutely view this as a growth market,” said Raskin.
Meanwhile, Bankwell, headquartered in New Canaan, is in a full-throttle growth plan. “We have nine branches in Fairfield County and New Haven and we’re looking to add a couple of branches this year,” said David Dineen, executive vice president and head of community banking. “We are very focused on the Stamford and Norwalk areas for additional branches, especially as we plan to develop new business on the commercial lending side.”
Across the New York border, The Westchester Bank in White Plains is readying to expand its
branch network. “We have six branches and we’re looking for branch number seven,” said John Tolomer, president and CEO of the community bank. “Our business plan calls for a new branch each year and we’re always looking for the best possible locations.”
These area financial institutions do not see their branches as antiquated relics, but vital channels of communication with customers.
“Our branch managers are out often two to three days a week building relationships with our customers,” Tolomer said. “We almost want our branch managers to be the mayors of their local communities. When someone has a banking issue, we want them to think of our branch managers as the go-to persons.”
And there is still a sizable number of customers to keep branch banking thriving in the region. Stratford-based Sikorsky Financial Credit Union Inc., for example, which operates six branches in Fairfield County and three within Sikorsky facilities, finds an appreciative customer base among seniors.
“We get a lot of people in our branches between 10 a.m. and 2 p.m., which would indicate they are mostly retired because most people who are working would not be in a branch at that time of the day,” said Charles Hoddinott, the credit union’s senior vice president and chief operations officer. “We’re a very transactional-oriented institution and a lot of our customers do their transactions at the teller line.”
In addition to millennials and their banking habits, “We’re seeing the older generation look to mobile services, too,” said Bankwell’s Dineen. “They interact with kids and grandkids with their iPads and phone, so this is the next logical step for them.”
Dineen added that millennials came into Bankwell branches when the company started a pet adoption initiative in conjunction with nine Connecticut animal shelters. “Millennials are focused on what you do in the community you serve and in corporate philanthropy,” he said, noting that Bankwell offered matching dollar donations for customer contributions to the shelters’ fundraising.
Yet Greg Jacobi, senior vice president for distribution at Webster Bank, cautioned that mobile banking is still a relatively young technology whose fullest potential has yet to be tapped. “Our mobile banking is a fraction of what we see ourselves doing in the future,” he said. “We plan to build out more and more capability.”
Erasing the human element from banking in favor of digital interactions would be a grave mistake, Jacobi said. “Anyone can have a mobile app where you can punch in numbers. But you need to have bankers at the other end — that is a critical element.”