Banks shift to high-tech branches: More efficient spaces aim to meet customer demand

As consumers shift their preferences to online banking transactions, regional and national banks alike are adapting their services to meet customers’ needs.

Several banks have opened or are planning new branches in the Milwaukee market that are more high-tech and more efficient than the traditional model, a reversal of the trend toward brick-and-mortar branch closures in recent years.

PNC Bank today opened its teller-less “branch of the future” at 16th Street and National Avenue. Associated Bank has recently replaced several of its area legacy branches and plans to open a high-tech branch in Milwaukee’s Historic Third Ward in the spring.

National trend

There were about 9,300 federally-chartered banks nationwide in 2002, which had a total of 86,500 branches. Today, despite the fact that there are just 6,700 bank companies left, there are 95,800 branches, said Brian Stephens, partner, national sector leader-banking and capital markets at global professional services firm KPMG LLP. That’s down from a peak of 99,500 branches in 2009, before mobile banking became the norm.

“Banks are having a very careful look at their branch brick-and-mortar footprint, making decisions and choices, as the cost of those branches are high, generally speaking,” Stephens said. “The customer traffic through those branches, as measured by most banks, is lower.”

More than likely, Milwaukee banks are trying to improve the customer experience while increasing their own efficiency.

A recent KPMG survey of bank executives indicated 41 percent of banks nationwide plan to increase the number of branches in their network over the next 12 to 18 months, Stephens said.

“For the bank to show these folks the value proposition they have and their ability to differentiate themselves in the market, they’re going to have to connect personally with them,” Stephens said. “That’s why these brick-and-mortar branches are counterintuitively still out there.”

Local execution

Pittsburgh-based PNC’s new $5 million branch at 16th and National doesn’t have teller lines, but instead deploys full-service financial consultants with tablets to serve customer needs. A mix of about five full-time and part-time employees will staff the branch.

“What you’re getting is a better utilization of the people for what you want to do, and also we think better customer service for the client,” said Christopher Goller, PNC regional president in Wisconsin.

A “discovery bar” with computers and tablets for customer use and smart 24-hour ATMs are also part of the high-tech approach.

At 3,000 square feet, the branch in Milwaukee’s Hispanic neighborhood is actually a bit larger than PNC’s legacy branches, since there are more consultant offices rather than teller cubicles, Goller said.

Bilingual consultants will help customers open accounts and apply for loans, provide advice on mortgages, investments, merchant services and other financial products, and demonstrate online and mobile banking. Goller hopes the services can help the surrounding community avoid the use of payday loan services.

This is the 12th de novo Milwaukee market branch PNC has built since April 2011, bringing it to 34 total market branches.

“As other people have been closing branches, we’ve been opening branches here,” Goller said. “People still associate banks with that physical location. We made the commitment to do that, spent well over $50 million to do that.”

The customer base PNC is serving includes three generations it caters to, he said. The older generations prefer face-to-face banking, while younger generations prefer the ease of technology-based transactions.

“We still feel like at the end of the day, banking is a relationship business,” Goller said. “Technology has made the customer base so radically different but we don’t think it’s ever going to be one where you only want to talk to your bank through your phone.”

Unlike PNC, most banks are reducing the size of branches during the modernization process, Stephens said.

Green Bay-based Associated Bank has recently opened several new, modern branches in the Milwaukee market.

Its Haymarket Square branch, at 1301 N. Martin Luther King Drive in Milwaukee, offers seven-day banking and extended hours, self-service banking solutions and a digital demonstration zone. The bank also is planning a high-tech Third Ward branch in a smaller, 1,640-square-foot space at 102 N. Water St.

The demonstration zone is a self-service area that provides customers with an electronic kiosk to sign up for online banking or open a deposit or consumer lending account in the branch, with employees’ assistance if needed, said John Halechko, executive vice president, director of branch banking at Associated.

Associated Bank recently moved its Menomonee Falls branch down the road to a smaller location with better visibility. The bank will also open a replacement West Bend branch on December 16 and a new Racine branch will open on December 22 to expand its presence in that market.

The Third Ward branch is expected to open in March, and will serve as a pilot location for the bank’s virtual teller ATMs, which offer the traditional teller experience through a video call, Halechko said.

With the virtual teller, Associated can further increase the efficiency of its staffing model and the convenience for customers, with extended hours. The branch is expected to function with standard hours and services with about four employees, Halechko said.

“It’s not purely just the technology side. It’s looking to reposition branches with our new branch archetype, which is a smaller, more efficient design than what our older branches are,” Halechko said. “It’s really not expanding the number of branches we have, it’s really about relocating and repositioning our current assets to be in a more high-traffic area to serve our customers.”

This desire for increased branch visibility follows national trends, said Chris Harris, principal in the national banking consulting practice at EY.

“Branches are a branding point and continue to be important in the origination,” Harris said. “Even millennials, who will otherwise probably never walk into a branch again, might be part of that branch for their first interaction.”

Harris said he expects the number of net new branches in Milwaukee to continue increasing due to competition among banks.

“In Milwaukee, I believe the No. 1 factor is there are banks not unlike PNC who see it as an opportunity to grow, and so competition is likely to increase,” he said. “They want to be seen as tech savvy, as nimble, as hip and current, so the branches reflect that to the next generation of customers to whom they are trying to appeal.”

As consumers shift their preferences to online banking transactions, regional and national banks alike are adapting their services to meet customers’ needs.

Several banks have opened or are planning new branches in the Milwaukee market that are more high-tech and more efficient than the traditional model, a reversal of the trend toward brick-and-mortar branch closures in recent years.

PNC Bank today opened its teller-less “branch of the future” at 16th Street and National Avenue. Associated Bank has recently replaced several of its area legacy branches and plans to open a high-tech branch in Milwaukee’s Historic Third Ward in the spring.

National trend

There were about 9,300 federally-chartered banks nationwide in 2002, which had a total of 86,500 branches. Today, despite the fact that there are just 6,700 bank companies left, there are 95,800 branches, said Brian Stephens, partner, national sector leader-banking and capital markets at global professional services firm KPMG LLP. That’s down from a peak of 99,500 branches in 2009, before mobile banking became the norm.

“Banks are having a very careful look at their branch brick-and-mortar footprint, making decisions and choices, as the cost of those branches are high, generally speaking,” Stephens said. “The customer traffic through those branches, as measured by most banks, is lower.”

More than likely, Milwaukee banks are trying to improve the customer experience while increasing their own efficiency.

A recent KPMG survey of bank executives indicated 41 percent of banks nationwide plan to increase the number of branches in their network over the next 12 to 18 months, Stephens said.

“For the bank to show these folks the value proposition they have and their ability to differentiate themselves in the market, they’re going to have to connect personally with them,” Stephens said. “That’s why these brick-and-mortar branches are counterintuitively still out there.”

Local execution

Pittsburgh-based PNC’s new $5 million branch at 16th and National doesn’t have teller lines, but instead deploys full-service financial consultants with tablets to serve customer needs. A mix of about five full-time and part-time employees will staff the branch.

“What you’re getting is a better utilization of the people for what you want to do, and also we think better customer service for the client,” said Christopher Goller, PNC regional president in Wisconsin.

A “discovery bar” with computers and tablets for customer use and smart 24-hour ATMs are also part of the high-tech approach.

At 3,000 square feet, the branch in Milwaukee’s Hispanic neighborhood is actually a bit larger than PNC’s legacy branches, since there are more consultant offices rather than teller cubicles, Goller said.

Bilingual consultants will help customers open accounts and apply for loans, provide advice on mortgages, investments, merchant services and other financial products, and demonstrate online and mobile banking. Goller hopes the services can help the surrounding community avoid the use of payday loan services.

This is the 12th de novo Milwaukee market branch PNC has built since April 2011, bringing it to 34 total market branches.

“As other people have been closing branches, we’ve been opening branches here,” Goller said. “People still associate banks with that physical location. We made the commitment to do that, spent well over $50 million to do that.”

The customer base PNC is serving includes three generations it caters to, he said. The older generations prefer face-to-face banking, while younger generations prefer the ease of technology-based transactions.

“We still feel like at the end of the day, banking is a relationship business,” Goller said. “Technology has made the customer base so radically different but we don’t think it’s ever going to be one where you only want to talk to your bank through your phone.”

Unlike PNC, most banks are reducing the size of branches during the modernization process, Stephens said.

Green Bay-based Associated Bank has recently opened several new, modern branches in the Milwaukee market.

Its Haymarket Square branch, at 1301 N. Martin Luther King Drive in Milwaukee, offers seven-day banking and extended hours, self-service banking solutions and a digital demonstration zone. The bank also is planning a high-tech Third Ward branch in a smaller, 1,640-square-foot space at 102 N. Water St.

The demonstration zone is a self-service area that provides customers with an electronic kiosk to sign up for online banking or open a deposit or consumer lending account in the branch, with employees’ assistance if needed, said John Halechko, executive vice president, director of branch banking at Associated.

Associated Bank recently moved its Menomonee Falls branch down the road to a smaller location with better visibility. The bank will also open a replacement West Bend branch on December 16 and a new Racine branch will open on December 22 to expand its presence in that market.

The Third Ward branch is expected to open in March, and will serve as a pilot location for the bank’s virtual teller ATMs, which offer the traditional teller experience through a video call, Halechko said.

With the virtual teller, Associated can further increase the efficiency of its staffing model and the convenience for customers, with extended hours. The branch is expected to function with standard hours and services with about four employees, Halechko said.

“It’s not purely just the technology side. It’s looking to reposition branches with our new branch archetype, which is a smaller, more efficient design than what our older branches are,” Halechko said. “It’s really not expanding the number of branches we have, it’s really about relocating and repositioning our current assets to be in a more high-traffic area to serve our customers.”

This desire for increased branch visibility follows national trends, said Chris Harris, principal in the national banking consulting practice at EY.

“Branches are a branding point and continue to be important in the origination,” Harris said. “Even millennials, who will otherwise probably never walk into a branch again, might be part of that branch for their first interaction.”

Harris said he expects the number of net new branches in Milwaukee to continue increasing due to competition among banks.

“In Milwaukee, I believe the No. 1 factor is there are banks not unlike PNC who see it as an opportunity to grow, and so competition is likely to increase,” he said. “They want to be seen as tech savvy, as nimble, as hip and current, so the branches reflect that to the next generation of customers to whom they are trying to appeal.”

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