Page 9 - BusinessWest May 13, 2024
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 more competitive.”
Senecal agreed, noting that this is just one of the many pressures
facing financial institutions today.
“Banks used to have 4% margins; getting out of bed, they had 4%
margins — they didn’t have to do anything,” he explained. “Margins are down to 2.5% now and struggling to get to 3%. No banks in this country are enjoying those 4% margins we used to enjoy because information
is so readily available that consumer behavior can change in an instant. You can move your money so fast, and that sort of competition drives attractive prices — it drives mortgage rates down, and it drives savings rates up, which squeezes margins.”
Points of Interest
This simple math explains why size is more important than ever before in this industry, and thus why the current pattern of mergers and acquisitions will continue into the future, with both banks and credit unions.
DAVE GLIDDEN
“Everyone is trying to deliver that Amazon experience, and it’s of great importance today for a bank to stay up with what the consumer’s expec- tations are — and that’s higher, probably, than what banks have his-
torically delivered.”
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“It’s a consolidating industry, and we’ll continue to consolidate,” said Glidden, adding that, for a number of reasons, ranging from rising inter- est rates to the current administration in the White House, the pace of such transactions has slowed somewhat in recent years.
But consolidation will continue, he said, and especially on the com- munity-bank level.
And while the number of banks continues to shrink, it is likely that there will be fewer of the traditional branches that have come to symbol- ize the industry, said Glidden, who worked for many of those institutions no longer here — Shawmut and then Bank of Western Massachusetts., for example — before arriving at SIS (which was later acquired by Banknorth, which was subsequently acquired by TD Bank), before mov- ing on to Liberty.
He made it clear that branches are still critical to any institution’s success, and they provide great visibility. But there is no denying that use of these facilities continues to decline.
“Many of our younger generations have never been in a branch and probably never will be in a branch and are fine with a totally digital banking experience,” he said. “And this has really changed the dynam- ic of how we as bankers and financial advisers have to respond and engage our customers.
“Years ago, you might have gone to the branch once a week, or, if you were a small-business owner, you might go five times a week,” Glidden went on. “The reality now is that you might go the branch every two or three weeks, or you might go to it when you really have a question or problem you want resolved and you don’t want to do it through the call center or any of the other channels.”
As a result of these trends, banks are looking to maximize the visits that do happen, he said, while also thinking hard about consolidating their branches. He can see a day a bank with maybe 20 branches in an area like Greater Springfield might want to get down to 10.
Moriarty agreed that fewer people are visiting branches and those that do visit them less often, but he stressed that there will always be a need for such facilities.
“I feel that customers still want to come in and talk to someone, either to better understand a product or get advice or just get that face- to-face interaction because trust is a big part of the equation,” he told BusinessWest. “Down the road, we’ll still see that kind of interaction because people want and need it.”
Whether they will still need cash is another story, he went on, add- ing that, given the pace of change and the emergence of debit cards, he wonders how long consumers will still need coins and currency.
That might be the next chapter in the ongoing evolution of banks, credit unions, and the entire financial-services industry. BW
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