As the COVID-19 pandemic raged last year, banks were quick to respond, shuttering or restricting in-person activities and swiftly moving to increase their digital and other remote activity. Now, despite the recent delta variant surge, more branches have been able to reopen as increasing numbers of Americans have been vaccinated — 70% of New Jerseyans over the age of 30 have received at least one vaccine dose, according to a July 23 announcement from the state Department of Health — and bankers are able to look ahead to long-term changes in their business model.
Many New Jersey banks had previously invested in digital services, so “although the pandemic accelerated the shift by three to five years, the changeover went well,” said NJBankers CEO John McWeeney. “Many people adopted remote banking during the height of the pandemic, and lot of them continue to use it.”
NJBankers members report that “many employees are working in a hybrid fashion,” he added. “At NJBankers we’ve officially closed the offices, but we’ve established appropriate safeguards so people can come in to work if they want to. We plan to open up the office again after Labor Day on a three days in-office and two days remote schedule; at least unless the delta variant changes that.”
In fact, hybrid models likely will dominate. “On the commercial side, relationships matter a lot and we continue to maintain a very hands-on model, with appropriate safety practices,” noted Tom Iadanza, chief banking officer at Valley Bank. “On the consumer side, the shift to more mobile and digital continues — we’ve seen a 25% increases year-over-year — but some consumers prefer face-to-face transactions, so we’ve been re-opening branches as appropriate, with safety measures.”
Valley tracks branch-level activity and Iadanza says selected branches may be redesigned, perhaps some becoming appointment-only, some with longer hours for “advisory” transactions, and some adopting a hybrid model. “We’re carefully looking at everything,” he added.
Valley is also “engaging in more physical branding, and digital and social media marketing to reach existing and new consumer clients,” explained Iadanza. “At the same time, we continue to make safe, face-to-face visits to prospective and existing commercial customers, while accounting firms and law firms are referring clients to us.”
The sweep of COVID accelerated changes at Manasquan Bank, said CEO James S. Vaccaro. “More people went online and mobile during the height of the pandemic,” he noted. “Even in the last six months, our customers’ digital usage is up more than double digits, and we expect that trend to continue. At the same time, we’re prepared to welcome and service customers in person, too, without compromising anyone’s safety.”
When it comes to digital versus in-person visits, Vaccaro doesn’t see much difference between commercial or consumer preferences, but he does see a generational split. “The older generation seems to lean toward in-person activity, although we have seen more of them adapting to digital,” he said. “Our ability to accommodate customers when and how they want to meet has helped to spur our business- and consumer-customer growth.”
Responding to customer needs is also a key component of Provident Bank’s strategy, according to CEO Christopher Martin.
In June, the bank released a survey that found 91% of respondents conduct banking through digital channels, with 53% of them reporting the switch to digital banking was pandemic-promoted.
“Walk-ins have been declining for years, especially since people can just take a photo of their checks with a mobile device and deposit it with a few clicks,” he noted. “So that’s where banking is going. But at the same time, many people want the option of connecting with a human if they’ve got questions.”
So Provident is looking at consolidating some branches, while it changes the look of others. “You no longer need 3,000-square-foot branches within a mile of each other,” said Martin. “New ones are more likely to be 1,500 to 1,800 square feet, and the design will be more consultative, with specific transaction spots available, too. But the concept of branch banking remains viable — people always have the option of clicking through a transaction, but we want to stay personal and relevant by giving customers multiple options, including meeting with someone face to face. We’re always available to sit down for a coffee to talk things over.”
Operating models are changing at other institutions, too. “Our employees came back to the office beginning May 3, on a hybrid schedule where they work from home two days a week and from the office three days a week,” said Columbia Bank CEO Thomas J. Kemly. “The specific work-from-home rotation is up to the individual employee, in consultation with their supervisor. We’ve been monitoring this approach and it’s been working out very well. Employees appreciate the flexibility, but they also value in-person interaction.”
At the branch level, “we stayed open throughout the pandemic, while maintaining safety protocols,” he noted. “We continue to utilize appropriate hygienic and other safe practices, including plexiglass shields between customers and banking personnel — so we can continue to serve our communities in-person and digitally.”
OceanFirst Bank President and Chief Operating Officer Joseph J. Lebel III said preparation paid off for his institution. “Our advanced digital offerings, such as video tellers and mobile banking tools are a result of years or investment,” he noted.
“Even before COVID-19, customers expected interactions with their bank to be seamless across channels such as mobile and remote banking — as they look at our offerings as one delivery system, using whatever is convenient for them at the time. It might be a branch visit, a video chat, a phone call or a mobile deposit or payment. All have to work consistently and seamlessly.”
He added that the bank’s investment in digital offerings, “coupled with our constant focus on improving the customer experience will allow us to attract and retain clients. We are continually looking to enhance our relationships and constant reinvestment in people and technology will drive success.”
At Northfield Bank, brick-and-mortar banking will remain part of a strategic approach, but CEO Steven M. Klein noted that, “The old playbook went out the window with COVID. We saw an acceleration of the movement of customers to online and mobile banking, but they also want the option of in-person activity when it’s appropriate, with safety measures in place,” he said. “So we plan on maintaining branches in strategic locations, primarily near population centers and clusters of depositors. The idea, as it’s been throughout, is to maintain relationships with our business and consumer customers.”
On the consumer side, Northfield Bank has stepped up its mailer and other programs, while beefing up incentives to attract and retain individual customers. For businesses, “we continue to reach out to new business clients and make personal visits — when appropriate and safe — with prospective and existing ones.”
The benefits of face-to-face contact extend to the bank’s internal operations. “We initially quickly moved to ensure our employees could work remotely as appropriate — outfitting them with laptops and ensuring that their online activity was secure,” Klein added. “We’ve since moved to a hybrid model — which is likely to be with us for the long term — where employees are coming in about half the time. It’s a great tool for attracting and retaining employees. To ensure business continuity, they’re bringing their laptops home with them at the close of each day [in case the office must unexpectedly close.] The challenge, of course is with employees who have children. Depending on how school openings and childcare play out, we may have to revisit the strategy.”
For Blue Foundry Bank CEO James D. Nesci, the post-COVID banking environment is being customer driven — “it’s all about how they want to be serviced, in-branch, online, video-conferenced or other. We will keep our options open,” he said.
Meanwhile, Blue Foundry continues to build new branches, but smaller ones. “The traditional model for some banks was 4,000 to 6,000 square feet, but now 2,200 square feet or less is the norm,” added Nesci.
A Blue Foundry branch in Hoboken that’s in the planning stage will be under 1,000 square feet, he notes, “with fewer employees but a higher level of service, thanks to the universal banker concept.”
The bank’s also investing in more automation, including TCRs (Teller Cash Recyclers) and ITMs (Interactive Teller Machines). TCRs basically replace the traditional cash drawer with a slot that authenticates incoming bank notes and securely stores the cash in an internal vault. It can also process automated cash transactions for tellers, including deposits and withdrawals.
An ITM is a kind of ATM on steroids, adding a video terminal that allows users to speak with a remote teller who can walk customers through complicated transactions and perform other services. “It’s safe and secure and enables our in-branch personnel to focus on higher-value services,” Nesci noted. “Customers want speedy, frictionless activity, and that’s what we’re offering to them. Branches are increasingly being structured like an Apple store: nice looking and highly automated, but with in-person options if you want them.”