Banks today are doing more with less, as banking companies continue to grow deposits while also shuttering branches in an effort at cost control, according to a report this week from SNL Financial.
During the 12-month period from July of last year through the end of June 2014, American banks whittled their branches down to 94,715 from 96,329 a year earlier even as deposits topped $10 trillion, compared with $9.4 trillion last year, the company said, citing the FDIC’s Summary of Deposits.
That 1.68 percent dip in branch closures marks the largest year-over-year decline since at least 1994, the earliest year for which the FDIC makes that data available electronically, SNL Financial said in its analysis.
It’s no secret that razor-thin margins have forced banks to take a closer look at cost-cutting measures, and declining foot traffic to branches has meant that underperforming branches may be on the chopping block.
Still, others have revamped the traditional branch model, installing cross-trained customer service representatives at open pod-style modules equipped with cash recycling machines – in contrast to the traditional teller line of yore. Customers still want to come into the branch, the thinking goes, but they’re more likely now to enter a physical bank for some type of life event – applying for a car loan, for example – than they are for transactions that can just as easily be handled online.
Ion Bank in Naugatuck has installed personal tellers in three of its branches. The ATM-like machines can connect a customer via video to a customer service representative in the bank’s headquarters. While the rest of the branch is closed after "bankers’ hours," the video tellers are available to those customers who can’t make it into the branch between 9 a.m. and 5 p.m. on a weekday.
For its own analysis, SNL Financial talked to the chief strategy officer at Florida-based CenterState Banks, which was in the process of shuttering four branches after closing a pair of open-bank deals earlier this year.
CenterState, Chief Strategy Officer Chris Nichols said, estimates it will retain as much as 94 percent of its core deposits at the branches it plans to close – largely because it takes a lot of energy on the customer’s part to close an account.
