Massachusetts’ banks face a potentially confusing set of decisions in the coming months as Berkshire Bank and Webster Bank dramatically curtail their retail footprints across New England.
Conventional wisdom would suggest that the maneuvers open up a big opportunity for competitors to grab market share. Without the ability to go to a branch, will customers still want to keep their money with a bank? Will pulling out of a market signal to customers that they are no longer valued?
On the other hand, Berkshire and Webster are both projecting confidence that their strong digital offerings will allow them to retain customers.
“Our optimization plan is consistent with customers’ preferences and adoption of digital banking channels and our commitment to enhancing those channels as a 21st century community bank, interim Berkshire CEO Sean Gray said in a statement accompanying news his company was giving the ax to 16 branches in the area.
And he pointed to data from Berkshire’s previous bank closures suggesting a high rate of customer retention after those events – hardly something for doubters to sneeze at.
Yet, as Diane McLaughlin notes in her story this week, there are plenty of banks who still see branches as a vital component to winning and retaining depositors, and reasons to think the branch still has mileage left in it.
Despite the pandemic, the share of bank customers who use mobile apps to manage their bank accounts grew from 36 percent to 39 percent this year, a Morning Consult study found. Given the ubiquity of smartphones and most bank apps’ ease of use, it’s surprising that number isn’t larger.
So, what’s a bank to do if it sees a competitor close up a branch? Charge into the communities Berkshire and Webster are leaving with new branches? Ramp up their marketing campaigns, relying on the same growing preference for online banking to make up for the lack of expanded branches? Or sit on their hands, knowing that the hassle customers face in disentangling their financial life from one bank and transferring it to another will be enough to put many off the notion altogether?
Webster’s and Berkshire’s deposit share in areas where they’re leaving bears careful watching in the quarters ahead, as does their ability to draw new commercial, residential and business loan customers. It’s one thing to retain depositors you already have, but it’s another business altogether trying to gain new customers and build lender-borrower relationships from afar. If both banks can make this shift produce growth, they will have a lot to teach us all.
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