The Future of NC: Branching out

 In Features, February 2016

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PNC Financial Corp.’s new 2,950- square-foot Ballantyne branch in south Charlotte offers a hint at what banking may look like in 2026: Individual offices geared to private chats about money have replaced the teller line, while iPads at a console enable customers to bank online. At Winston-Salem-based Truliant Federal Credit Union, which has opened seven branches in the Charlotte area in the last 15 months, tellers shift their computer screens around so customers can know what’s up with their accounts. Gone are teller lines, which Truliant President Marc Schaefer compares to East German border crossings. Such is the hedge-all-bets approach that banks are taking by offering options as they look ahead. “We don’t want to push customers out, we want to pull them in,” says Conrad Wood, Pittsburgh-based PNC’s business banking market manager in Charlotte. “We’ve created an environment that’s not only inviting and warm but also has the technical capabilities to allow them to do [banking] any way they want.”

Banks must change because customers are using mobile technology — paying bills, depositing checks are the biggies — at a faster pace than ever before, says Peter Gwaltney, president of the N.C. Bankers Association. “Sometime last year, a number of our members said their in-branch transaction traffic had suddenly dropped off sharply. Some say it was like dropping off a cliff.”

Even more rapid change is expected over the next decade, particularly as business lending becomes more automated, he says. “The industry has been pushing Internet and mobile banking for many years, but last year it took hold. So each bank has to rethink its model.”

Many consumers live online, researching what they need or want, Schaefer says. If they come into a branch, “we might be able to help them and guide them,” he says. He recalls a member who came in seeking a $50,000 car loan and left with a loan half that size and a plan to pay for his child’s college education.

By 2026, many of North Carolina’s 62 remaining banks won’t make the transition and will have merged into larger rivals, predicts Tony Plath, a UNC Charlotte finance professor who studies banking. He estimates North Carolina will have 34 banks then, including three with more than $25 billion in assets now: Bank of America, BB&T and First Citizens BancShares. Another seven banks with assets of $1 billion to $25 billion will be operating, half the current total. And about 24 smaller banks will exist, half the current total.

Gwaltney also foresees a declining pool of lenders in the state because of depressed net interest margins, the prime source of bank profit. Persistent low interest rates have hurt banks, but particularly smaller ones that don’t have sources of fee income like the big guys. “Until interest rates go back to normal, and until the regulatory burden on banking is less oppressive, we will see the number of banks shrink.”

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