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In digital age, bank branches hit all-time high

BY Grant Welker

6/12/2017
PHOTOS/Edd Cote
PHOTOS/Edd Cote
UniBank's branch on Gold Star Boulevard in Worcester features a comfortable seating area, and more informal teller desks.

Practically any bank customer can have paychecks automatically deposited into an account, withdraw from an ATM, or even deposit or transfer money by phone.

Even if there are fewer reasons than ever to walk into a bank, that hasn't meant branches are closing. Instead, banks are renovating their spaces, going smaller and more informal, and training branch employees to do more of everything a customer may need.

“It's been a trend from transaction to expertise,” said Bryan Christensen, the director of community banking for Natick-based Middlesex Savings Bank.

Middlesex has seen the number of its online and mobile banking customers rise by one-fourth in the past three years alone. The bank has seen a steady 2- to 4-percent drop each year in the rate of customers using branches for traditional deposits or withdrawals in recent years, Christensen said, but it has also found proximity to a branch remains a major factor in someone deciding where to bank.

In response, Middlesex's 30 branches have been rebooted with standalone stations where a customer can make deposits or withdrawals with an employee who is trained to also help with more complex financial requests a customer might have, like getting a loan.

Middlesex Bank's moves reflect what is happening in the state and nationally. The number of customers using mobile and online services is spiking, but so are the number of bank branches: Massachusetts is currently at an all-time high of 1,325 branches since the Federal Deposit Insurance Corp. started keeping track in 1934, while the 82,000 branches nationally is down only 2 percent from its all-time high set in 2012.

In Central Massachusetts, banks are following trends toward smaller branches looking little like they might have a generation ago, centered around a rope line leading to a teller window.

Whitinsville-based UniBank, which has 13 locations, designs new branches to be about 1,500 square feet, said Chris Foley, the bank's director of consumer banking. Not long ago, branches were more often 2,500 to 3,200 square feet, he said.

UniBank has demonstration iPhones, iPads and Android phones to show customers how to bank online, and several branches no longer have tellers separated from customers. The days of thick glass separating employee from customer are largely long gone.

“It's breaking that traditional 'You're there, I'm here,'” said Paulo DeOliveira, the relationship branch manager at UniBank's branch on Gold Star Boulevard in Worcester, a five-year-old branch with all of the company's new features.

Berkshire Bank last month announced plans to buy Worcester-based Commerce Bank as part of its plans to become a major Northeast banking institution, but Berkshire plans to do that largely without a branch expansion.

Berkshire uses “live banker areas,” with employees not tied to a particular location. At one of its Boston branches, Berkshire uses interactive teller machines – known as ITMs – self-service kiosks that work like advanced ATMs, with a person available to help by video if needed. Berkshire plans to convert more of its branch ATMs into ITMs.

“Traditional retail branch models were designed before the internet and mobile banking. Times and branches have changed,” Tami Gunsch, Berkshire's executive vice president for retail banking. “Brick-and-mortar branches are not going away. They are changing, and in a good way.”

Research conducted in 2010 by architecture and design firm Gensler found that two out of three bank customers go to a branch a few times a year or less. Only 7 percent visited once a week or more.

“It was a bit surprising” at the time, said Julie Reker, who leads Gensler's retail practice in Boston. "For today, it's not."

She found declining in-person transactions don't spell doom for brick-and-mortar branches.

“We're finding that a physical branch is still important, even if they never physically walk into that branch,” Reker said.

A sharp drop in the number of physical branches is not expected any time soon. Keefe, Bruyette & Woods, a financial services research firm in New York City, said in a report in April it foresees only very modest reductions – around 2 percent a year – in branch numbers.

John Smith, the CEO of DBSI Inc., an Arizona company that helps bank plan or redesign branches, said enough people still aren't astute or comfortable with technology to forget walking into a bank storefront.

“Only about 15 percent of the general public is truly tech-savvy,” he said. “The rest of the population looks at all of that with a little skepticism and fear.”

Still, Smith said, transformation is necessary. Instances of people walking into a branch needing to solve a particular problem are up, he said, so bank employees must have a broader knowledge of how to help people. Among the features he advocates for the self-service kiosks much like the ITMs Berkshire is rolling out in its branches.

Citizens Bank, which has more than 30 Central Mass. locations, has accelerated its gradual branch renovations, hoping to re-do about one-third of its 1,200 branches in the next three to five years, said Beth Johnson, the company's head of consumer strategy.

“Consumers still want to have that personal touch quite often,” she said, describing a demand that has guided the branch overhaul. “We want to change the look and feel of the network.”

The Massachusetts bank with the most radical changes to its branches is Capital One. Eight Boston-area Capital One Cafes are more coffee shops than they are banks, with much of the space devoted to couches or other comfortable seating where people can buy Peet's coffee and a pastry and use the bank's free Wi-fi. There are 19 such cafe branches, with more on the way.

Capital One cafe branches were the result of hearing that in-person interactions are still important and that people weren't always sure where to go for financial questions.

“The digital component has made things easier but not changed how money and finances are still a very stressful topic for people,” said Jaci Stoltz, the vice president of Capital One Cafes. “We took that feedback and have set out to take the stress out of money for people.”