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PNC forges new model for its banks

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Citizens Bank works on improving mobile services

Citizens Bank is rolling out technology to make it easier for customers with smartphones to view their balances and make check deposits, closing the gap with competitors who have moved faster to offer mobile services.

One new service lets customers use the video camera on a mobile device to capture check images and make deposits. The other lets customers view account balances without needing to log into their mobile banking app on an Apple or Android phone.

The new technology is in response to growing demand for mobile banking services, said Citizens spokeswoman Lauren Digeronimo.

“One of the great things about the mobile banking world is that it is really easy for our customers to tell us what they want next,” Digeronimo said in an email. “Mobile deposit is the number one requested enhancement our customers have asked us to make to our mobile banking applications.”

Rhode Island-based Citizens, which is owned by the Royal Bank of Scotland, has been criticized for lagging behind competitors such as PNC in offering more online and mobile banking services.

Offering new services like these is a step in the right direction, said Morningstar analyst Dan Werner.

“This definitely helps them catch up a little,” he said. “It depends on how good the interface is.”

— Chris Fleisher

Wednesday, June 4, 2014, 11:33 p.m.

Traditional branches with teller lines will be a minority in five years at Pittsburgh's largest financial institution.

PNC Bank will be rolling out a slimmer, more tech-savvy model that responds to changes in how people do their banking, said Todd Barnhart, head of branch banking.

“We think the majority of branches will shift to this model over time,” Barnhart said. “We need to be both physically and digitally where our customers want to be, when they want us to be and how they want us to be versus a traditional model.”

If you want to know what your nearest PNC branch could look like in the next couple of years, check out an Apple store.

Open floor concepts and lots of technology to touch. And tellers? Think of them more as retail consultants who are there if you need them. Customers will handle most of their transactions on super-charged ATMs as PNC employees stand by to answer questions, demonstrate technology and offer financial advice.

The new branch concept, which already can be found in Bakery Square and Oakland, constitutes only about 5 percent of PNC's 2,700 branches nationwide. By 2019, about two-thirds will be “tellerless,” Barnhart said. PNC is pushing this retail transformation more quickly in the South, where it has a smaller presence and more easily can test new ideas.

Nevertheless, the concept will become more common in Pittsburgh in the next year or two.

Dan Werner, an analyst with Morningstar, said PNC has been at the forefront of a transformation in retail banking that has shed brick-and-mortar locations and boosted mobile services as consumers shift more of their financial transactions online.

Three decades ago, 95 percent of households used a bank branch, according to Werner's report. Today, that is down to 50 percent, and analysts expect that to fall to 33 percent by 2020 as more consumers use their smartphones, tablets and laptops to do their banking.

In a report this year, Werner said PNC and Wells Fargo were “ahead of peers in the transformation of their branch networks” and that “PNC has, by far, the most aggressive plan for transforming its branches and footprint.”

Last year, PNC closed 186 branches and 22 in the first three months of this year, even as it converted other locations to the new model.

There remains a need for physical branches, Barnhart said. But they won't look like what most consumers are used to.

“We'll have the physical place called a branch,” Barnhart said. “But how it's staffed, and what goes on there, will be different.”

This change isn't just about responding to consumer demands. There is cost savings to banks, mostly in staffing, from closing branches and serving customers online. Processing a digital deposit is up to 95 percent cheaper than using a teller, according to the Morningstar report. Staff reductions, largely related to branch closings, resulted in personnel costs savings of $89 million in the past year for PNC.

However, cutting costs isn't what is driving decisions on the transformation, Barnhart said.

“It is not a primary driver for us,” he said. “It is a potential outcome.”

Demographics and market characteristics will determine where and when the conversions will occur, Barnhart said.

PNC has been road-testing some of its innovations in the South, where it expanded since acquiring Royal Bank of Canada's operations there two years ago. The bank still has a relatively small market there, and the younger customers in Southern cities like Atlanta make them good places to test new technology and models, such as partnering with retailers to set up a mini-branch in a drug store.

In Pittsburgh, where the population is older and PNC branches busier, those changes will come more slowly.

Currently, five out of PNC's 150 Pittsburgh-area locations are designed with this new model. Customers should begin seeing more starting at the end of this year, and increasing through 2015 and 2016.

“I think more as we get into the back half of ‘15 and into ‘16, you'll see a more material number start to show up,” Barnhart said.

Chris Fleisher is a staff writer for Trib Total Media. He can be reached at 412-320-7854 or


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