Even In Technology Era, Banks Continue To Invest In Age-Old Model

PHOTO/Matt Pilon SpencerBANK is seeking regulatory approval to renovate this historic and long-abandoned building in Worcester's Elm Park for a new branch.

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Think for a moment: When was the last time you walked into a bank branch to transact business with an actual human being?

For those who use mobile phones or ATMs to do virtually all their banking, the answer could be months, maybe longer. That presents a continual challenge for banks that are trying to get face time with and sell financial products.

"People will go to a branch to open an account and then try to avoid going there ever again," said Martin Connors Jr., CEO of Fitchburg-based Rollstone Bank & Trust.

But for consumers and especially businesses, branches remain important for routine transactions and larger purchases, such as loans or mortgages.

In Worcester County, the number of branches (including commercial lending offices) rose almost 10 percent over the past decade, from 210 in 2002 to 230 in 2012, according to the Federal Deposit Insurance Corp. (FDIC). Branch growth in the county has outpaced that of the state, which was 7.5 percent over the same period. But both have been declining over the past four or five years, matching a national trend.

Despite that, branches remain a vital part of the banking business model. And banks are expanding their geographic reach as they try to grab more market share from competitors.

SpencerBANK, formerly Spencer Savings Bank, planted a flag in Worcester for the first time last year with a retail branch on Park Avenue — it has six altogether — as it began seeking regulatory permissions to renovate a historic and long-abandoned building just down the street in Elm Park.

Michael Robbins, president and CEO, said SpencerBANK has been lending in the Worcester and MetroWest markets for years, and it made sense to try to capture new deposits in the city.

"That's where the population is. That's where the business is," Robbins said

The bank received a key approval last month from the city's historical commission, which granted a waiver to the city's demolition delay ordinance that will allow the Fire & Telegraph Building on Park Avenue to be renovated.

In partnership with Preservation Worcester, which will control the first floor, SpencerBANK will build a two-story addition at the rear of the building.

Robbins anticipates a late summer 2014 opening.

SpencerBANK isn't alone in building new branches. Pittsfield-based Berkshire Bank opened a commercial office in Westborough last year and will wrap those services into a retail branch that's under construction down the road on Route 9 on the site of a former Friendly's restaurant the bank bought for $1.6 million in August. About three miles east, St. Mary's Credit Union is building on the site of a second former Friendly's and hopes to open it this summer.

TD Bank opened a branch on East Main Street in Marlborough in November, not long after Hometown Bank cut the ribbon on a new branch on Southbridge Street in Auburn in September. And Fidelity Cooperative Bank just opened the doors to its Millbury branch.

A Different Look

Branches are changing in an effort by bankers to adapt to customer wants and demographics.

Whitinsville-based UniBank moved into the Worcester market last year with a uniquely designed branch on Gold Star Boulevard that doesn't have traditional teller windows, and features a lounge area with television sets, seating and free coffee. UniBank also opened a Grafton branch, its 10th overall, last month.

UniBank's branch in Worcester follows the "neighborhood store" model that's catching on in the retail banking world, said Ric Carey, a Texas-based consultant who previously oversaw an Oregon-based bank called Umpqua, which grew from $1.5 billion to $11.5 billion in assets from 2003 to 2011. Umpqua started building smaller branches in 2005, with lounge areas and even their own brand of coffee. Carey sometimes calls it "the Starbucks model."

"Basically it was around 2,400 square feet; no drive in," he said.

It could be the banking trend of the future as banks grapple with how to deal with lower transaction volumes.