In 2022, Going to the Bank Is Still a Thing

The COVID-19 pandemic has proved the importance of digital technology in the business community, but that doesn’t mean the old-fashioned, in-store experience is necessarily going the way of the dinosaur.

Arkansas banking officials can attest to that. While banks such as Arvest Bank of Fayetteville and Simmons Bank of Pine Bluff may sell off unused or underachieving bank locations periodically, the brick-and-mortar bank still plays a vital role in the banking industry.

“I’ve been in banking for 25 years and for all 25 years they have been warning us that brick-and-mortar was going away,” said Tim Alther, managing director of retail branches for Bank OZK of Little Rock. “That does not seem to be an accurate forecast. People enjoyed that face-to-face interaction.”

When the pandemic hit the United States in early 2020, many banks, like other commercial enterprises, closed their doors to try to prevent the spread of the coronavirus. For banks, the inconvenience was alleviated somewhat by digital banking tools that allow a customer, for instance, to deposit a check over their smartphone from the comfort of their living room.

Banks kept their drive-through windows and ATMs open, and virtual conferencing bridged the gap for customers who needed to speak to bank officials about financial matters. But when quarantine and safety protocols lifted and banks reopened their lobbies last year, customer traffic quickly returned to pre-pandemic levels at most locations.

“When we started reopening lobbies last summer, our banks were flooded,” said Robyn Breshears, the executive director of sales, service and support for Arvest Bank. “People were excited to finally get in and take care of business they really didn’t feel comfortable doing online or didn’t know how to do online. There are preferences in why people choose why they want to go to the bank and why they don’t.

“Money is emotional to everybody,” Breshears said. “When you’re dealing with big decisions like buying your first home or starting a business, a live person in front of them is much more important.”

Arvest Slims Down

In November, Arvest sold 16 bank branches in its four-state region, including nine markets in Arkansas.

But the decision to sell wasn’t pandemic-related. Arvest has been divesting itself of branches since it acquired Bear State for $391 million in April 2018.

Breshears said Arvest studies a variety of factors in each expansion-contraction decision. It all boils down in the end to how to best serve the customer, she said.

“Part of it is the proximity [to] another location and the ability to serve our customers without overpopulating the branches,” Breshears said. “When we acquired many Bear State locations, some we had in locations where we already had branches. We look at population; we look at traffic patterns; we look at profitability.

“We try to be very pointed in ‘How is this community going to be served?’ by a financial institution because that is very important.”

The paring of brick-and-mortar locations has reduced the number of Arvest branches in the state from 124 in 2019 to 110 as 2022 begins. As you’d expect, when Arvest sells an unused or unneeded bank location, the buyer is often another bank.

Breshears said in those cases Arvest can add a “caveat” to the contract that restricts when the competing branch can open and operate the new location. If there is a market in need of a bank after Arvest departs, then, Breshears said, the property is sold without restrictions.

Alther said any network decision Bank OZK makes is based on a “methodical, well-thought-out plan.” The pandemic affected banking but Alther said Bank OZK leaders didn’t want it to affect their long-term growth plans.

The number of Bank OZK’s Arkansas locations has barely moved since the pandemic. There were 82 in-state before the pandemic and there are 81 as this year begins.

“We have closed some bank locations or sold them based on branch dynamics,” Alther said. “We have opened a few new branches in high-growth or high-potential markets. Our overall branch count has remained pretty steady. We are not a bank that tends to overreact. The customers depend on us to not panic and be there to take care of their needs.”

‘Very Mindful’

Simmons Bank has been very active in the acquisition of banks and their assets during the past decade, scooping up Metropolitan National Bank and Delta Trust & Bank, both of Little Rock, in 2013.

Simmons added to its portfolio by acquiring Southwest Bancorp of Stillwater, Oklahoma, First Texas HBC of Fort Worth, Spirit of Texas Bancshares of Conroe and two Tennessee banks. The acquisitions give Simmons entry into markets it considers key to the bank’s expansion.

“Pre-COVID we always had the bottom 10% of our branches that we looked at on an annual basis to see how we’re tracking,” said Matt Reddin, chief banking officer for Simmons Bank. “Even with the bottom 10%, with the acquisitions we have made and the investments we have made in digital capabilities for our clients, we have been very mindful of whether the bottom 10% is what we need to be looking at. We already had our eyes on a lower quartile of our performance.

“We know with digital adoption there is going to be less and less need for five branches in a town when you could just have three. We were working on that.”

Reddin said brick-and-mortar banks still have an important position in Simmons’ banking operations but the pandemic was revealing. Reddin said in-bank teller transactions have fallen annually at Simmons, and even with lobbies reopened after the lifting of quarantine restrictions, digital transactions outnumbered in-bank ones.

“That made us go, ‘Hmmm, maybe it is time to close a few more,’” Reddin said. “Transaction counts at a branch have gone down year over year over year. We are conscious of what does that mean at the end of the day, what is that math telling us down the road. Well, it definitely tells us there are going to be fewer branches.”

Adapting Technology

Breshears said Arvest will take the lessons learned during the pandemic and incorporate them moving forward.

One such adaptation is its ATM Live feature. ATMs are convenient because customers can stop by a machine 24 hours a day, withdraw or deposit money and be on their way.

The weakness lies in the fact that the ATM is a machine. The ATM Live feature has an Arvest banker available through videoconferencing between 7 a.m. and 8 p.m. at the ATM so customers can interact if they have questions or concerns.

Banks are also incorporating appointments. Breshears said that makes sense, comparing a banking appointment over a financial concern to a doctor’s appointment to address a physical concern.

“Customers are demanding different things from us now, as they should,” Breshears said. “They expect different things from a digital perspective, from a technology perspective. They want to self-serve much more easily. What the pandemic has done has caused us to evaluate our hours of operations and the ways we will serve our customers.”

Breshears said the new ideas are a mixture of technology and old-school banking. Arvest is the state’s largest bank, with more than $26.5 billion in assets, but Breshears said it still tries to think and act like a community bank.

Alther said Bank OZK, with $26.1 billion in assets, has invested heavily in technology, especially in the ATM area.

“We firmly believe that the brick-and-mortar bank strategy is one that will continue to flourish,” Alther said. “I will say that we have seen quite a few customers take advantage of digital or ATM deposits via mobile; we have seen that movement. As soon as our lobbies reopened, we saw our normal traffic patterns reassert very quickly.

“I’m excited about what 2022 holds. I do think we will continue to learn and evolve over time with what we have faced. We are thankful for our customers and our teammates who weathered the storm with us.”