Modern banking strategy: Clicks and branches

Submitted photo
The Bank of Charles Town recently finished renovations to its office in Charles Town, W.Va.

Financial institutions testing ways to serve customers.


By Mike Lewis
Middletown Valley Bank plans to build a new branch on Pennsylvania Avenue in Hagerstown, Md., later this year.
By Mike Lewis
Patriot Federal Credit Union is building a new branch off Robinwood Drive just east of Hagerstown, Md.

Count area banks among the businesses trying a wide range of approaches these days.

“It’s all about an experience,” said Alice Frazier, president and CEO of the Bank of Charles Town. “What experience are we creating when they come in (to a physical office or a digital service)?”

Area banks are testing various approaches to creating that experience.

The Bank of Charles Town recently finished renovations to its main office in Charles Town, W.Va. Patriot Federal Credit Union, based in Chambersburg, Pa., has started construction on a new branch just east of Hagers-
town, Md. Middletown Valley Bank, based in Middletown, Md., plans to open a second branch in Hagerstown later this year. BB&T, which inherited several branches in the region through its acquisition of Susquehanna Bank, has developed “U by BB&T,” a new financial management system for computer and mobile banking. It also joined a national trend by announcing the closure of three branches — two in the Hagerstown area and one in Franklin County, Pa.

Record closings

In the wake of the financial crisis and with the rise of digital and mobile banking, banks throughout the country have been closing branches at the fastest rate in decades.

According to a Wall Street Journal analysis of federal information, the number of branches in the United States fell by more than 1,700 in the 12 months ending in June 2017. That’s the biggest decline on record.

Branch numbers fell again in the second half of 2017, according to data submitted to regulators and reviewed by the Journal.

A Bloomberg report mentioned some high-profile names. Among those cutting branches were Citigroup Inc. and Bank of America Corp., as well as regional banks such as Capital One Financial Corp., SunTrust Banks Inc. and Regions Financial Corp.

Area bankers say the reasoning is simple. Fewer people are coming to come branches, leaving some locations unprofitable. At the same time, they also said customers still want a personal touch, particularly when they need to make important transactions or solve problems.


‘The relationship’

Frazier, who has been with Bank of Charles Town since July, noted that the bank has expanded into Hagerstown and Loudoun County, Va., in recent years. Two things have been critical to those decisions, she said. First has been some disruption in the local market, such as BB&T’s acquisition of Susquehanna. Second has been having bankers on staff with knowledge and relationships in the communities.

“To be successful, you really do need some of that local intelligence,” she said.

That kind of thinking also is part of the reasoning behind the bank’s newly designed office. It’s not only intended to invoke a sense of stability and trust, it’s also designed to encourage people to linger, relax and talk.

Some customers, she said, will wait in line just to do business with a specific teller.

Digital banking is necessary these days, she said, but “it never replaces the relationship.”


‘Convenience can mean multiple things’

John Kilduff, corporate affairs officer for Patriot Credit Union, acknowledges the bank is building a new branch at a time when consumers are making fewer in-branch visits.

“The trend in the financial services industry shows consumers conducting fewer in-branch transaction, while the volume of online banking and mobile transactions continue to rise,” he wrote in an email. “The adoption of the digital channel with online and mobile banking services has put more and more consumers in ‘self-service’ mode but that doesn’t mean branches aren’t still important to them. Consumers want to have the choice to do business the way they want. Whether they are a frequent visitor to the branch or whether an active online or mobile user, various surveys show that consumers still prefer having the assurance that there is a branch available with knowledgeable staff, where they can go for personal assistance and information if they need.

“Our focus at Patriot is serving the member by offering them the products and services they want and making it convenient. Convenience can mean multiple things to consumers — sometimes it means having a digital channel like online and mobile banking, and sometimes it means having a branch or ATM located nearby … Also, not all of what occurs at a branch is transactional and can easily be replicated with a digital channel or can be automated. Some financial services are better done face to face. For example, services that pertain to business banking and retirement planning or wealth management are more suitable with a deeper personal interaction.”


‘The opportunity for both’

B.J. Goetz, president and chief executive officer of Middletown Valley Bank, said he understands why some banks are closing branches while others are opening more.

“The strategies of different banks rely on different things,” he said. Right now, Middletown’s strategy means  building another branch in Hagerstown, to join the credit servicing center it opened last year and the branch it built in the city in 2015.

“The actual branch network is not used as often by the consumer,” he said, but “the customer wants the opportunity for both” in-person and online banking.

For Middletown, it’s also about sending a message.

“You have to be the economic driver. … We want to invest in our communities. We want to create jobs in our communities,” he said.

“Our focus is to improve economic conditions within the local community.”

‘An important part’

Even some banks that have closed branches still have multiple locations for consumers. That’s the case with BB&T. It will still have six locations in Franklin County, Pa., and 10 in Washington County, Md., after the three closures. And the company said no layoffs are expected because of the moves.

“More and more, our clients are choosing to conduct their banking business digitally both here at BB&T and in the financial industry as a whole,” David White, vice president of corporate communications for BB&T, said in an email at the time of the announcements. “While branches are still an important part of BB&T’s business model, we’re constantly evaluating all of our locations in terms of client-use patterns and convenience within the markets we serve.”