PNC forges new model for its banks
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 firstname.lastname@example.org.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Experts: If health insurers’ safeguard goes broke, consumers could pay
- Pittsburgh union serving TV, film production looking for lots of help
- Visa limits vex businesses
- Methane leaks reportedly decrease in Pennsylvania
- Nike, Under Armour invest in watching exercisers’ steps
- Camera prevalence approaches sci-fi realm
- Kings Family Restaurants sold to California firm
- Watch out for fraud, elder abuse
- Paper’s prevalence unlikely to diminish
- ‘Promposals’ can be small as burritos, big as Jumbotrons
- Rules could kick door open for nuclear power