The rapid growth of mobile and online banking is driving banks on Long Island to experiment with their branches, executives say.
Many local banks and credit unions have shrunk the size of their branches and reduced the number of employees at each location. Banks also have retrained tellers to handle more complex tasks, while at least two Long Island-based financial institutions have centralized some of their teller functions by installing video terminals displaying tellers at a remote location. A third plans to follow suit this year.
The shift comes as online banking becomes normal practice, locally and nationwide, and across all age groups. One credit union in the region said about 85 percent of its customers 55 and older do business with it online.
Online banking is also a major reason -- along with mergers -- why the number of branches on Long Island dropped 8 percent during the past decade to 895, according to federal statistics and experts.
They aren't the branches of yesteryear, when massive, stone buildings with thick Roman-style columns projected stability, structure and safety. While the buildings remain, they now house restaurants, pharmacy chains or, in at least one case in New York, an Apple Store.
Nevertheless, bankers and experts said, branches are not going the way of bookstores and video rental retailers, many of which have shut down as shoppers moved online.
Bankers say a branch is necessary to compete in any town, village or hamlet on Long Island.
"Retail banks need branches in any area where they want to be in a relationship business," said Michael N. Vittorio, president and chief executive at Glen Head-based First of Long Island Corp. "And banks are in the relationship business."
Branches are also an effective way to collect deposits, according to FDIC statistics. Despite the smaller number of branches here, deposits have risen to $73 billion in Nassau County, as of June 30, from $58 million five years earlier. Suffolk branch deposits rose to $56 billion from $40 billion in 2012.
But the teller taking a deposit at Westbury-based NEFCU and Uniondale-based Flushing Bank may not be in the branch at all. Customers at some of their branches can connect with a human remote teller at the institution's headquarters who can deposit checks, dispense cash and perform other standard teller duties.
Teachers Federal Credit Union, based in Hauppauge, expects to offer the same service at some locations this year.
Other institutions have eschewed the strategy, saying customers want to interact with a person in house at a branch.
New York Community Bank, which is the largest bank headquartered on Long Island based on its $48.5 billion in assets, and other banks have shifted to the universal banker model, in which tellers also take on responsibilities such as recommending and explaining investment products that are historically handled by personal bankers.
The universal banker model keeps traditional tellers active during downtime, bank experts and executives said.
"By 2020, about half of the transactions that tellers conduct today will be done in an alternative channel," such as online and mobile banking, said Lisa Holland, TD Bank's president of retail banking for suburban New York and Long Island. "Our tellers are trained to also help with customer service. It's good development for them. It deepens their skill sets, which is good for their résumé and their future."
At NYCB's Mineola branch Kelly Katayanagi handles more than standard teller responsibilities as a financial service associate. She said she is asked a lot "about CD renewals and opening new accounts, so we have to be knowledgeable . . . I'm able to recommend a product."
Even with the new model, most banks are shrinking the staff size and footprint at branches, said John W. Smith, chief executive at Chandler, Arizona-based DBSI Inc., a bank consulting firm.
"The necessity of the larger bank branch is gone, because they're no longer transaction oriented" due to online banking, Smith said. "Transactions [in branches] are dropping 4 to 5 percent per year, so banks, right now, are dealing with shifting from transactional branches to advisory branches. The bank is there to help people in their life journey."
TD Bank's new branches are about 2,500 square feet with about 10 employees, compared with what had been their standard 3,800 square feet and 12 employees, Holland said. The bank started rolling out the smaller branches on Long Island in 2015.
First National Bank of Long Island's new branches are about 1,000 square feet, which is "far smaller, because it doesn't have the same expense base," said CEO Vittorio. Each branch has about three employees, he said, fewer than in years past.
Bank of America's branch sizes depend on the community, said Jim DeBois, a senior vice president and operation executive at the bank.
"Our Syosset branch, for instance, is on Jericho Turnpike, where it's really busy," DeBois said. "There, we have all the specialists you need. . . . Another branch is not going to be as busy."
Bankers said that despite the growth in online banking, they are still opening branches in select locations because it's difficult to compete in a neighborhood without one.
First National Bank has expanded to 50 branches, 42 of which are on Long Island, including one in East Setauket that opened in the second half of 2017. Vittorio said further growth into Brooklyn and Queens will take place this year.
Bethpage Federal Credit Union, the largest credit union on Long Island, with about $8 billion in assets, has 35 branches and is looking to add branches in western Nassau and Queens, said Linda Armyn, senior vice president of corporate affairs at Bethpage.
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NYCB has 44 locations in the region under the Roslyn Savings Bank division. It has 225 branches in five states overall.
"Anytime a customer comes in, they're entrusting their money or life savings with us, and we believe an opportunity to interact with them is mutually beneficial," said Mark Beausoleil, first senior vice president and director of retail banking sales and service at NYCB.
TD Bank has 67 branches in the Nassau-Suffolk market, including five it opened in 2016.
While BNB Bank is closing six branches based near other locations, it is expanding elsewhere. For instance, it opened a branch in Riverhead in 2017.
"Branches are relevant to our business, said Kevin O'Connor, CEO at Bridge Bancorp, BNB's Bridgehampton-based parent company.
"The reality is [banks are] being smarter with where they put branches," said Carmen F. Effron, the president of bank consulting firm C F Effron Co. in Weston, Connecticut. "Once you're a bank's customer, internet services like online banking and apps make it much easier for you to make deposits and to buy investment products like CDs. And once you have multiple products with the bank, there is a better chance you'll stay with them."
Smith of DBSI added that a better economy also has led to deposit increases for financial institutions.
"Banks and credit unions are still very much seen as the places to safely place a household's more liquid cash in savings, checking, and money market accounts," Smith said.
Armyn at Bethpage said branches are necessary to add credit union members, aka customers, but once they've joined, more of their banking activity is taking place online. She said more than 80 percent of Bethpage members use online banking services.
"That's the case for every age group," Armyn said. "About 82 percent of millennials use online banking, and 85 percent of people over 55 also use it."
That is similar to the national trend. The FDIC said in a 2016 study that about 70 percent of bank customers use online services. It also said 37 percent reported online banking as their primary method for accessing a bank account, compared with 28 percent that rely on bank tellers.
Mobile banking also has risen in popularity nationwide. The Federal Reserve said 43 percent of all mobile phone owners with a bank account had used mobile banking in 2015, up from 33 percent two years earlier. The percentage has risen since then, Long Island bank and credit union executives said.
"The app is being used more by younger members, where 61 percent of the 21- to 34-year-old group uses it, while only 26 percent of those over 55 are," Armyn said.
Most banks have developed apps that let customers do a range of banking, including manage accounts and transfer money, from their phones.
"Our app is growing in popularity," O'Connor at BNB said. "You can deposit checks, check balances and transfer money from your phone. It's a game changer."
But mobile apps won't render branches meaningless anytime soon, O'Connor said: "We need that mark on the ground."
Plus, sometimes customers just need a shoulder to lean on.
"We have had people come in every now and then just to sit down and talk," said Rebecca Schenker, second vice president and branch manager at NYCB's Roslyn Savings Bank branch in Mineola. "Not even about banking, but about life."
By David Reich-Hale firstname.lastname@example.org
David Reich-Hale reports on banking, the business of health care and other topics. He joined Newsday in 2014. He has also worked at American Banker and the New Haven Register. He is from Trumbull, Connecticut.
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