When the Old Hickory House restaurant, a local landmark in Dunwoody Village, closed in 2014, a prankster resident posted a sign out front reading, “Anything here but a bank.”
Today, SunTrust wants to turn it into a new branch bank.
In the digital age, major banks are moving services online and slashing branch banks by the thousands nationwide. So why is the Perimeter area seeing a branch boom big enough to inspire that joke-turned-prediction in Dunwoody?
Experts say the factors are a booming local economy, expanding banks wanting to plant flags, and the marketing of more personalized services that branches can provide.
“I think that brick-and-mortar certainly is not obsolete today, but there’s no question it’s certainly used less by customers today than in past generations,” said Chris Burnett, market president at the Bank of Sandy Springs.
But that’s still a lot of customers, and the face-to-face personal banking touch can be a big factor in customer loyalty and marketing specialty products, Burnett said. Most individual customers still prefer to set up an account in person—even if they bank online day-to-day later—and Burnett said he expects the baby boomer generation to continue a brick-and-mortar leaning as they age.
“I think, by and large, they are still more comfortable with a personal bank relationship as opposed to online banking,” said Burnett.
At the Bank of Sandy Springs, Burnett changed the way the building functions in response to modern times. “We’ve taken out the traditional teller line” in favor of desks with comfortable chairs, he said.
In part, that’s making a virtue of modern banking’s necessity of reduced staffing, but it’s also part of the community bank’s marketing of “high-touch” personal relationships instead of herding customers in lines. Burnett said the personal touch is also important for banks that market specialty services like wealth management and insurance that involve a sense of trust.
Such changes mirror larger industry trends. An American Bankers Association report last year said more than 2,600 branch banks nationwide shuttered in 2014 and staff was cut within many of those that remain. But the real trend, the report said, is not eliminating branch bank systems, but rather “optimizing” them.
For example, Chase Bank last year announced the closure of 300 branches—but also the reconfiguration of far more, about 1,200 of them, to automate routine services and focus personal contact on customers who really need and want it.
Brad Miller, a consumer network planning executive at SunTrust Bank, talked in system-optimizing terms about why the bank is looking at the Old Hickory site. He said SunTrust aims to “consistently refine its branch network” and that the Dunwoody location gives good customer access and a more efficient building.
“The branch banking center continues to be an important resource for many of our clients,” Miller said, adding that in the online banking era, “many clients still prefer to use branches for more in-depth conversations in order to gain the financial confidence to achieve a life well-spent.”
The Old Hickory happens to be right next door to a Bank of North Georgia branch. Burnett said branches serve as important marketing in a metro Atlanta boom time. He said that during the 2008 recession, about 90 Georgia banks closed. Now that number is climbing back up, with many new banks entering the market and plenty of bank mergers and acquisitions.
The real question for the banking industry—and probably for the fate of other beloved former restaurants—is what the millennial generation will want after growing up online.
“Branches will change or die,” said a Bain & Company report last year on bank customer behavior and loyalty, while adding that some the trends are elusive. The report found that most customers use a mix of physical and online banking and that branches can be an important way to build customer relationships.
On the other hand, the report also found that customers who use branches frequently are almost three times more likely to switch banks than those who frequently bank online. And the digital world offers all sorts of new ways to offer personal touches without literally in-person contact, it noted.
So it remains to be seen whether millennial customers will want face-to-face banking, or what “face-to-face” will mean in the tech future. At the Bank of Sandy Springs, a place where they still offer customers free coffee and hand out candy to their kids, Burnett said, “Candidly, we don’t have an answer to that question.”