Branches: Still the Heart of Community Banking

You’ve heard it before, and chances are you’ll hear it again: the branch is dying. If that’s true, why are so many financial institutions investing in their branch networks, either through remodeling or new construction? 

The answer: the branch is more than a building—and it always has been. Community banks connect with their customers and neighbors through their branch networks. Those networks are evolving to meet the needs and preferences of a new generation of customers, but branches are still an essential channel for delivering banking services. 

At a virtual session held during Fiserv’s Forward Forum in July, Connected Experiences: Branch Transformation Trailblazers Blend Talent and Technology, Fiserv Senior Product Manager David Johnson, who leads product management for self-service banking automation, explained that existing branch optimization challenges have evolved further in 2020 due to the pandemic, but that transforming their branches is a successful strategy banks can use to adapt. “Finding the next normal of service delivery falls squarely in the realm of branch transformation,” he said. “The changing nature of our interactions changes how we deliver products and services to customers.” 

Branches are designed to provide the best customer experience possible, but what constitutes the “best experience” has changed over time. According to new research from Fiserv (July 2020), since the pandemic began 33% of survey respondents had increased use of mobile payment apps, 27% increased use of mobile check deposits, and 46% do not plan to visit a branch within 30 days. Many of these trends started before anyone had heard of COVID-19, but the pandemic has accelerated and magnified their impact. 

To get a close-up look at what tomorrow's branches are designed to do, WBA spoke with five member banks that recently opened a new or renovated branch. 

State Bank of Cross Plains 

New branch location: Middleton 
Opened: May 30, 2019 

Peoples State Bank, Wausau 

New branch location: West Allis 
Opened: March 11, 2020 

Denmark State Bank 

New branch location: Sheboygan 
Opened: Feb. 17, 2020 

Bank First, Manitowoc 

New branch location: Oshkosh 
Opened: Jan. 6, 2020 

Bay Bank, Green Bay 

New branch location: Keshena, Menominee Reservation/County 
Opened: December 2020 (anticipated) 

While diverse in how they accomplish it, each of these banks’ branch investments exemplifies how the industry can build a new recipe for branch success. Some key ingredients: 

1: Strategic Growth 

New branches follow growth, not the other way around. Many new offices open because the bank’s strategic plan calls for organic growth and senior leadership has identified the community as an opportunity. For example, Peoples State Bank President/CEO Scott Cattanach said the bank made a strategic decision to pursue new market growth, and because they had already achieved significant market share in their home footprint of northern Wisconsin, they began looking to other areas of the state for opportunities. “From a broad perspective, we were looking to break into a higher-growth area of Wisconsin,” he explained. “Though we started it as a loan office, we always intended for it to become a full-service branch, because that’s when we, as a community bank, are most effective.” 

Sometimes that location is specified in the plan itself, as is the case with Bay Bank’s newest branch in Menominee County. “This branch is executing on our strategic plan,” said Bay Bank President Jeff Bowman. “It’s in writing in our plan that we will assist other tribal communities of Wisconsin.” In doing so, Bay Bank is bringing the first full-service bank branch to Menominee County, which was the only one of Wisconsin’s 72 counties that did not have a bank branch. 

2: The Right People 

“A lot of this centers around the people we hired,” said Denmark State Bank President and CEO Scot Thompson. “Without the right people, it’s difficult to grow.” The same pattern emerged, in most cases, for the launch of a new branch location. After determining which market was the best fit to target, the bank built relationships with key individuals in that market who then built up a portfolio of accounts, and eventually the community expressed demand for a full-service branch. “It’s part of our strategy and it all starts with people,” said Bank First CEO Mike Molepske. “Assemble a team, build some accounts, then open a branch.” 

By building the new branch’s team from within the community, the bank not only leverages existing client connections, but also demonstrates its commitment to bolstering the local economy, which can be a considerable component of success. “We’ve made the commitment to hire and train members of the Menominee community to work at the bank,” said Bowman. “We will create some new local jobs and launch some new careers in banking.” 

3: Community Engagement 

Investment in a new branch demonstrates the bank’s strength and ability to serve the community. “When you build a significant building on a significant corner—100,000 cars drove by daily, before COVID—it's a sign of the bank’s success and strength,” said State Bank of Cross Plains President & CEO Jim Tubbs. “Beyond it demonstrating an investment in the community, it shows that things are going well.” 

The physical presence of a branch is also how banks forge a connection with a new community. “People bank with people,” Thompson explained. “It’s a relationship you build over time. There is a benefit to still having face-to-face communication along with automation and technology. That’s where community banking has its niche.” The hallmark of community banking is relationships, and branches facilitate that advantage. “If we can’t deliver a personal touch we can’t deliver our best value,” said Cattanach. “We’re only successful if our customers are successful.” 

Also, each bank highlighted the goal of community engagement and support in talking about the motivation for the new branch. “Over the long haul, we will be able to increase home ownership, play a role in developing new housing, and providing access to capital in the form of small dollar consumer loans and small business loans,” explained Bowman. “We have 25 years of experience making mortgage loans on Tribal land. We’re transferring that unique skillset to a new community.” 

4: Brand with the Building 

Tubbs said the new State Bank of Cross Plains building was designed to communicate the bank’s tremendous commitment to the city of Middleton. “I believe, especially in the community bank space, the branch network is much more than a channel to do business with your customers,” he explained. “It’s a recognition of your brand and a huge part of your marketing for your organization.” 

Bank First’s newly opened branch in Oshkosh was designed with lots of natural light, built with recycled materials, and decorated with artwork from local artists, just like Bank First’s other branches, which means customers know what to expect when they walk in. “Whether it’s new or retrofitted, it needs to fit our brand,” Molepske explained. “When you walk into the building, you feel comfortable. It feels strong and professional. It’s a great place for customers to visit and our employees to work in.” 

With less foot traffic in branches, every interaction counts more. “You have to provide what consumers are looking for,” said Cattanach. “That requires your staff to be more multifunctional.” Universal bankers and ITMs are part of that transformation and are (or will be) featured at many of the new branches highlighted in this article. The ITM is a good example of the dichotomy of current customer demand; they want high-tech digital solutions and the ability to meet face-to-face with a trusted advisor. “Especially in the Midwest, a significant part of our customer-base still wants to come to the bank,” said Tubbs. “Without a doubt technology has changed people’s habits, but there’s still that desire.” 

A recent global survey by Deloitte showed consumers prefer to visit a bank branch for more complex banking services, such as opening an account, and this preference is fairly similar across generations: 64% of Baby Boomers, 54% of Gen Xers, 48% of Millennials, and 56% of Gen Z consumers surveyed said they prefer to visit branches when opening a new checking account. Despite branch traffic trending down, this shows the value of a branch—and its ability to deepen customer relationships—grows over time. “A new location is an investment,” said Thompson. “It doesn’t turn around Day One or even Year One. It's an investment in future growth and income.” 

So, while bank clients of all ages may visit branches less often—as few as five times per year according to some surveys—most don’t want branches to go away. “The branch will be with us forever,” said Molepske. “It’s the heart of community banking.” 

Seitz is WBA operations manager and senior writer.

By, Amber Seitz