Banks cut branches
Houston banks charted a steady course ahead in 2018, moving to increase their reliance on technology as new digitalonly competition entered the market, while riding through a volatile stock market in the back half of last year.
Deposits to financial institutions hardly increased in 2018, rising only 2.2 percent from 2017. Compared to the growth between 2016 and 2017 of 10 percent, deposit growth in the market was significantly slower.
Several larger banks in the area, such as JP Morgan Chase and Wells Fargo, closed more branches than they opened in Houston last year, as consolidating resources became more important as consumer preferences change.
Part of the difficulties brick-and-mortar banks faced in 2018 was the entrance of online-only financial institutions that have disrupted the traditional banking market.
Traditional banks in 2018 continued to adapt strategies to compete with these other business models by
upgrading mobile banking apps and adjusting their branches to focus more on advisory services than the basic transactional needs of customers, which can now easily be done online or through an application.
For example, Allegiance Bank, a community bank with over $3 billion in deposits that services primarily small to medium-sized business owners, in the last year upgraded its entire online banking system to a new provider in order to offer more features to business owners with an easier customer interface.
“The deposit landscape is as competitive as it’s been in a long time with technology,” said Ray Vitulli, president and chief operations officer of Allegiance.
Allegiance also introduced an application that business owners can use to process their payroll, complete wire transfers and detect fraud from a mobile device.
The growing influence of online and mobile banking continued to lead to declines in branch locations for large banks such as JPMorgan Chase, Wells
Fargo and Bank of America in Houston.
Customers now tend to go into a branch location when they want to have a long advisory conversation, as opposed to quickly stopping in to make a deposit, industry leaders said. So, convenience-based locations just aren’t necessary anymore.
JPMorgan Chase, which claims the largest market share in Houston at 43 percent with over $103 billion in total deposits in 2018, is reimagining its branches. Rather than a place where most customers go to complete routine transactions like withdrawals and deposits, branches should now focus more on a place to receive financial advice.
“Our customers are really adapting to new technology and mobile banking,” said Kristen Habich, a managing director and private bank market manager for JPMorgan Chase in Houston. “Branches, they are transitioning to be more advice centered.”
The bank lost seven Houston branch locations between 2017 and 2018, according to data from S&P Global. Habich attributed this mainly to consolidation as customer desires shift.