KEEPING WITH THE TIMES
Even with new services, customers still want a brick-and-mortar option
Community banks, facing constant pressure from larger competitors, are putting an emphasis on technology while maintaining an in-person presence.
The community bank is no longer just a brick-and-mortar business.
Southwestern Connecticut-based banks are devoting an increasing amount of resources to digital banking as they respond to customer demand and aim to grow their businesses. The trend shows no signs of slowing, but both banks and their patrons have expressed a desire to maintain in-person service as the industry’s technology continues to advance.
“For these smaller banks, they need to find their niche, and they have to get ahead of the curve,” said Kwamie Dunbar, an associate professor of finance at Sacred Heart University. “The millennial generation needs online services, including banking, so for these small banks to get new business and be competitive, this is what they need to do.”
Going digital
Fifteen percent of customers are now “mobile dominant,” up from 10 percent a year ago, according to professional-services firm Price water house Coopers ’2018 Digital Banking Consumer Survey.
The growth of Darien-based Laurel Road’s online platforms, including its student-lending business of the same name, launched about three and a half years ago, spurred its rebranding this year. The firm was formerly known as Darien Rowayton Bank.
Among recent digital additions, Laurel Road has introduced mortgage and bank account-opening platforms.
“We’re mimicking the experience the we did on the student-lending platform with the deposit platform,” Scott Skorobohaty, Laurel Road’s executive vice president of community banking and commercial lending, said in a recent interview. “We know it will be quick, fast and efficient. … It cross-sells the client into another product for us. It helps improve our balance sheet.”
For Stamford-based Patriot Bank, its online platforms allow it to reach customers outside southwestern Connecticut, in turn creating a larger deposit base to support its overall expansion. Deposits reached $655 million in the first quarter of this year, up 17 percent from a year ago.
Among its latest staffing changes, Patriot has hired a chief marketing officer to manage and develop its mobile banking platform, as part of its overall online presence.
“In order for us to fuel growth initiatives, particularly around loans, we have focused on a more enhanced and sophisticated digital platform to track deposits that aren’t restricted by geography,” said Rick Muskus Jr., the bank’s president.
Stamford-based First County Bank is also allocating more resources to online services. Last fall, it appointed its then-chief marketing officer, Karen Kelly, to the new position of chief digital banking officer.
“We’ve made a significant investment in human capital,” said Reyno Giallongo, First County’s chairman and CEO. “We felt it was really important to carve out digital banking as its own line of business.”
Community banks like Laurel Road, Patriot and First County face relatively few downsides in expanding their digital offerings — as long as they understand the commitment that is needed, Dunbar said.
“It’s going to require constant and frequent investments to keep the technology moving forward,” Dunbar said. “That’s where it may be a challenge for these community banks. But if they get it right, there is tremendous upside.”
Need for traditional banking
Amid the growth of digital banking, customers said they still want analog options. In the PwC survey, 65 percent of respondents cited the importance of having a local branch, and 25 percent said they would not open an account with a bank that did not have at least one local branch.
Community bank executives have noticed those trends; they say brickand-mortar service remains integral to their operations.
Laurel Road maintains branches in Darien, Fairfield and Norwalk.
“The last thing we want to do in any way is alienate the client base that helped us get here, which is the client base that utilizes this (Darien) branch, the Rowayton branch (in Norwalk) and the Southport branch (in Fairfield),” Skorobohaty said. “Because of them, we’ve been able to go out and do the things we want to do on the fin-tech platforms.”
At the beginning of the year, Patriot launched a 11,000-square-foot flagship branch, at 999 Bedford St. in Stamford. It includes two “live banking” consoles — one in the building and another in a drive-through terminal — that allow customers to video-conference with bankers.
“Patriot is still a community bank, and our brick-and-mortar banking is a very valuable component,” Muskus said. “It’s the bedrock mission of Patriot Bank to be a strong community partner.”
First County has also expanded its branch system. In February, it opened a 2,400-square-foot establishment at 1312 Post Road in Fairfield. The downtown location is the bank’s 16th.
Increasingly, technology influences the in-person business. First County plans to launch later this year a “digital ambassador” program, in which a couple of employees in each branch would act as point persons on digital topics for colleagues and customers.
“Our employees need to understand how these digital services work and what the benefits are, and we also have to make sure our customers are trained in the proper use of these platforms,” Giallongo said. “The digital and in-branch experiences really go hand in hand.”