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Banking Briefing: All about branches

  • In a world of Web2s, Web3s, and Web-what-have-yous, a bank’s physical presence can almost feel passé.
  • But despite their decline in numbers, branches still very much play a role in banks’ success – from improving accessibility to getting in front of more consumers’ eyes.

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Banking Briefing: All about branches

Six months ago, the Financial Times published an article with the quote, ‘I’m old, not an idiot’ in the title. 

The quote comes from the name of a petition launched by Carlos San Juan, a Spanish man in his late 70s. The petition urged banks to stop closing down branches.

Last year, bank branch shuttering increased by 38% compared to the year before, according to research by S&P Global Market Intelligence. The rise seems to be correlated with the usual – Covid making people more mobile-first in their banking habits, and banks marching forth with their digital transformation plans.

Still, lots of people are raising eyebrows at these changes, including San Juan.

Branches play a major role in accessibility – for example, for people in their seventies and eighties. 

One thing this article illuminates is that it’s not always the case that elderly customers just have trouble with all that digital stuff and need nothing more than an easier interface or better access to experts to assist them.

Sometimes, it’s a case of literally not being able to use these digital features, in which case a nearby branch is necessary. One example offered is a woman in her eighties who, though a self-proclaimed tech-lover, still needs to go to a local branch for some of her banking activities because she’s unable to use the signature feature.

One bank that seems to have gone in a more pro-branch direction is Frost Bank. Since mid-2021, the San Antonio-based financial institution has been expanding its branch network throughout Texas. This year, it plans to open about a dozen new locations in Dallas.

Here's what Rod Washington, Dallas regional president at Frost Bank, has to say about the topic:

“Financial centers are necessary to meet customers’ needs, providing an additional entry point for people to easily access their money and in-person financial services, including elderly customers. Looking at our Dallas financial centers and the bankers at those locations, we are there to serve the entire community; however, customers in this demographic seem to visit our physical branches more regularly and appreciate that face-to-face interaction with their banker.”

'There's something about being face-to-face': Three questions with Rod Washington, Dallas regional president at Frost Bank

With its previous expansion in Houston and its current expansion throughout Dallas, Frost Bank isn’t shying away from growing its physical presence. I sat down with Rod Washington, Dallas regional president at Frost Bank, to hear a little more about what’s behind these moves.

What are the results you’ve seen since adding these new locations?

So far, we've opened up a couple of branches as part of this expansion. And we continue to see good distribution between both people opening accounts online, and people walking into the branches and opening accounts in person. Just as a point of reference, we opened a branch financial center in Midland Texas. And within the first month, we had about 100 new accounts opened in that financial center, despite it being brand new to the area and the community. And about half of those were walk-in traffic and half of those were online. 

And, you know, some of my banker friends have joked that we’re doing expensive billboards. And yes, it provides visibility for us. But also, it's really about providing another point of access. Then finally, I'll say about Dallas, we're in a growing community. And as the community grows here, we want to make sure that we're close to our customers.

How would you describe the main role of a branch?

I think the emphasis for our branches is to provide not only access, but advisory services.

And so, part of our strategy is to make sure these locations provide access to financial bankers, business bankers, along with wealth advisors, and sometimes insurance. And it's hard to do that over the phone, or over the internet. 

All this comes down to being able to offer a personal touch. There are a lot of business owners who are really looking for that trusted advisor – someone you can see face-to-face and have a human interaction with. It's just a great way of building long-term relationships. 

You know, technology has been wonderful in helping us get through this pandemic – I almost hate to think about how it would have been twenty years ago. But I think there is something about being face-to-face and establishing those long-term relationships that our financial experts and bankers provide.

What are Frost Bank's plans for its branches going forward?

I see us continuing to expand across Dallas, Houston, Austin, and San Antonio.

Texas has been a great economic engine, and we're continuing to see businesses relocate to the state, and new households and people migrate there. 

And then, as I mentioned earlier, we’re seeing more hidden communities grow and flourish in some of these locations. If you go back 30 years, these were very small towns.

Take Frisco for example – we're reopening a location there later this year. 

The growth in Frisco has just been astounding over the last 20 years. And now we have major Fortune 500 companies relocating there – and along with those relocations tend to come other relocations from their suppliers.

So as these companies relocate to Texas, and as these communities continue to grow, we want to make sure we’re there to help them grow and flourish and prosper.

What we're consuming 

Are neobanks entering past tense territory?

Digit got in trouble for falsely charging 2,000 users overdraft fees and not reimbursing them. Whoops. 

But the neobank is not alone in these types of hiccups. Several others, it seems, are getting into similar trouble. What does that mean for the sturdiness of the neobank model? (Bloomberg)

Tricks for banks betting on BNPL

BNPL is still a go-to for a lot of consumers. Nonetheless, the CFPB is just a tad concerned about there not being enough bank-backed offerings. 

For banks, that could provide the opportunity of a grand entrance. Maybe even a 'ta-da!' if the moment calls for it… (Forbes)

Crypto banks: Exclamation mark, question mark, or dot dot dot?

The Fed recently released a three-tiered framework that could provide a path for crypto banks to enter the traditional banking system. 

The framework doesn’t exactly spell out 'I heart crypto banks', but it does feel akin to an exasperated scientist going, ‘I mean, it’s possible, I guess.’ (Investopedia)

What we're producing 

Data Snack: 40% of SMBs would close if cash flow dried up today

3 questions with Radhika Duggal, former Chase exec, on her new role as CMO of SnapCommerce

Drying investments, falling valuations, increasing layoffs: Is the ‘fintech bubble’ bursting?

Ahon Sarkar, GM Helix by Q2, on how banks find their place in embedded finance

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