What do tiny Clarkston State Bank and big Ally Bank have in common? Almost nothing except their approaches to banking in the 21st century. For both, mobile banking and the internet are replacing brick-and-mortar branches.
Clarkston, which has $178 million in assets, introduced mobile banking two years ago. The almost-immediate dropoff in branch visits by customers was shocking, said J. Grant Smith, the bank’s president and CEO. Half of his customers now do mobile banking.
“We analyzed our data and saw such a decline in traffic, we closed two of our four branches a year ago,” he said. That closing included what had been the bank’s headquarters building, a stately historic stone structure on Main Street in Clarkston. It didn’t have a drive-thru, and small-town downtowns don’t get the foot traffic they used to, so historic or not, it was closed.
“We go see prospects now; we close deals at their offices. Fewer people come to banks. The feedback you get is there’s no reason to go to a bank,” said Smith, who said his bank has been aggressive in teaching older customers how to go mobile, “We’ve migrated a lot of customers over who weren’t using technology.”
Carrie Sumlin, Ally Bank: “It seems like we have had smartphones forever, but it’s only been since 2007.”
Carrie Sumlin is the digital consumer executive at Utah-based Ally, a division of Detroit-based Ally Financial Inc. (NYSE: ALLY), which means she oversees all online and mobile banking. In 2013, Ally was honored by the research firm Forrester for having the most customer-friendly mobile banking platform in banking.
In 2009, the former GMAC Bank rebranded itself as Ally Bank with the premise of building a bank entirely without branches, a decision Sumlin said has never been second-guessed. Even as banks around the country were being shut down during the Great Recession by federal regulators and were available for cents on the dollar, bank officials never considered getting into the brick-and-mortar business.
“We never had any serious discussion about doing that,” she said. “We were seeing such growth from what we were doing, we didn’t see any advantage to going to a brick-and-mortar environment.”
In 2012, Ally surpassed the million-customer mark. This year it passed $55 billion in deposits, and for the fifth straight year it was named the nation’s best online bank by Money magazine.
“In the last five years in the U.S., there has been a 333 percent increase in weekly banking mobile users and a 60 percent drop in weekly branch users, so the numbers are going our way,” Sumlin said. “The mobile banking shift and speed of adoption has been amazing.”
Photo by Larry Peplin Comerica’s interactive teller machine connects customers with a live teller if needed.
In March, Ally launched Apple Pay, in which customers with Ally debit cards could pay merchants with their Apple devices.
Area bankers say the mobile revolution in banking has changed nearly everything about branch banking, from either their disappearance or shrinking footprint, to the mix of employees who work at them.
“The adoption of mobile continues to accelerate,” said Matt Elliott, the Michigan market president for Bank ofAmerica.
The result is a different look to the inside of a branch. Instead of walking in and immediately seeing a line of teller windows, there are now more small conference rooms and offices. Instead of seeing tellers, customers see bankers who can handle a range of duties, from starting a mortgage to to small-business lending.
“We want to use branches less as a place to do a transaction than a place where you come in and speak to someone face to face about what you need,” Elliott said.
That often includes, he said, branches that have on-site financial advisers from Merrill Lynch, one of Bank of America’s business units. There are no tellers behind bars at Bank of America’s newest branch on Adams Road in Rochester Hills. There’s someone to greet you at the door and lead you to a meeting room. There’s a smart ATM that will give you money in denominations you ask for.
On May 23, at a Google conference in Mountain View, Calif., BofA announced it was rolling out its cardless ATM technology to 5,000 ATMs nationwide, including 40 in branches in metro Detroit. Using what is being billed as a digital wallet stored on smartphones, customers can make withdrawals, transfer money or check balances without a bank card.
Earlier this year, BofA rolled out the ATM technology in Boston; Charlotte, N.C.; New York City; San Francisco; and Silicon Valley.