The financial sector long ago embraced online banking, but the coronavirus crisis has boosted use of the technology to new levels.
Financial institutions reported an 85% increase in mobile-banking traffic in April combined with a 200% spike in new mobile registrations, according to Fidelity National Information Services. While the data reflects information shared by 50 of the world’s largest banks, regional and community institutions also are experiencing unprecedented levels of online and mobile activity, forcing many to ramp up technology investments and reconsider the role of physical bank branches.
West Warwick-based Centreville Bank reported a 40% increase in mobile banking since the onset of COVID-19, along with a significant increase in online banking and triple the use of its interactive teller machines, or ITMs, according to Cynthia Lariviere, senior vice president and head of retail.
Deposits through non-branch channels – meaning web and mobile – outpaced those made in person at Citizens Bank for the first time in the company’s history, said Brendan Coughlin, head of consumer banking for Citizens Financial Group Inc.
‘We’re never going to see technology staff dropping.’
DAN DECOSTA, BayCoast Bank chief information officer
Meanwhile, Marstone Inc., a Providence-based company that offers internet platforms to banks and other financial-services companies, had seen its pipeline of prospective customers double in the wake of COVID-19, according to CEO and founder Margaret Hartigan.
Even now, as banks begin to reopen their branches for resumed – albeit restricted – in-person services, the number of online and mobile users has not dropped off. A recent survey by national financial-technology company Novantas indicated only 40% of bank customers planned to return to branches after the pandemic.
Coughlin was not surprised, given the ease of use and flexibility offered by online and mobile banking.
“Just like a grocery delivery service, once people have tried it, it’s hard to believe they will immediately decide to go back to in-person grocery shopping,” he said.
Still, the surge in online and mobile banking has come with challenges. The day that the first wave of federal stimulus checks was reported to hit bank accounts, the volume of users on the Citizens mobile app stretched the application to its limits; while it never shut down, the app had a temporary wait time that left many customers without immediate access to their accounts for several hours.
A new mobile application, in the works before the pandemic and set to launch this summer, will help eliminate those capacity problems. At the same time, Citizens is considering other ways to simplify banking activities not currently conducive to online platforms, such as wire transfers and renewing a certificate of deposit.
“You’re always looking for the next thing,” said Dan DeCosta, chief information officer at BayCoast Bank, headquartered in Swansea. However, DeCosta said there needs to be caution so a bank doesn’t rush out new technology without the proper due diligence, which can create more problems than solutions.
Hence, the need for a new direction in bank hiring and training – not only of the programmers and web developers who create digital technology advances but also the back-office staff who support them.
[caption id="attachment_334482" align="alignright" width="273"]
INCREASED USE: Dan DeCosta, chief information officer at BayCoast Bank, uses an interactive teller machine at the Swansea-based bank’s Seekonk branch. Banks have seen increased use of mobile banking and ITMs since the onset of COVID-19. / PBN PHOTO/RUPERT WHITELEY[/caption]
“We’re never going to see technology staff dropping,” DeCosta said. “We’re only going to see that need increase.”
Investment in digital technology can also give smaller, community banks a better chance at protecting deposits amid the increasingly crowded and competitive fintech arena, Hartigan said.
“The more services and digital platforms a community bank or credit union offers, the less likely a person leaves,” she said.
But will increased attention and investments in technology mean the end of physical bank branches? It’s a question that’s been asked for years. In the last year, the banking and finance industry’s branch count decreased by 1,500, according to S&P Global Market Intelligence.
But bank branches are by no means obsolete, community bank leaders agreed. At community banks such as Centreville, personal relationships and interactions remain a hallmark of the company’s success, said Lariviere. For that reason, the bank continues to invest in brick-and-mortar locations, with new branches in Warwick and Cranston set to open this year.
Particularly for more-complicated or significant decisions – taking out a mortgage for a first-time homebuyer, wealth management or estate planning – customers still want in-person discussions with experienced bank branch staff.
“Transactions can be done electronically, but advice, relationship-building, guidance and counsel will, in our estimation, always be in person,” Lariviere said.
BayCoast was also not doing away with physical branches, though the idea of “carpet bombing” an area with branches had been replaced by more strategic and scattered locations, DeCosta said.
And a rise in remote banking eliminates many of the geographic barriers to increasing customer base, allowing a regional bank such as Citizens to become a national force, said Coughlin.
“The customer base is no longer defined by where you are physically present,” he said. “We’ve got our sights set on a pretty significant national expansion with a digital-first mindset.”
Nancy Lavin is a PBN staff writer. Contact her at Lavin@PBN.com.
