Associated Bank, a Green Bay, Wisc.-based institution with $26.5 billion in assets, had 315 branches in 2007.
Today, it has 225.
Is the bank in trouble? Far from it. The bank is pursuing the cost savings from branch closures, in part, to fuel the bank’s digital efforts. Cutting its branch network by a third was part of a deliberate plan, said CFO Christopher Del Moral-Niles, and a plan that is still underway.
“We take the long-term view and we’re prepared to invest long-term,” Del Moral-Niles told Bank Innovation.
Compare Associated Banc-Corp’s dramatic cut with the recent news that JPMorgan Chase & Co. is planning to cut 300 branches in the next two years — out of more than 5,600 branches. That’s a whopping 5%. Associated is taking a more aggressive approach to branch reduction.
“You could see where it was going in 2007,” Del Moral-Niles said. “Foot traffic was declining. We closed branches and saw real cost-savings early on.”
Those savings came without a significant loss of customers, said Associated’s executive vice president and head of consumer and commercial branches, David L. Stein, because the bank went after “low-hanging fruit” — branches that, because of acquisitions or other historical factors, were within a half-mile of each other, for example.
Harder choices lie ahead, but the bank is prepared to make them. Del Moral-Niles described a number of branches in small towns where the nearest other branch is 20 or 30 miles away. “This branch may only see 5,000 or 6,000 transactions a month, compared to 20,000 or 30,000 in a city branch in Milwaukee. If we close that branch, how many customers do we keep? I would say we only retain 50% to 60% of them.”
That may be OK with Associated [Ticker: ASB].
The cost-savings for branch closures are dramatic. “If we close four branches,” Del Moral-Niles said, “assuming an annual spend of $2.5 million per branch — that’s now $10 million we can invest in mobile.”
In 2013, Associated began its Retail Direct initiative, a strategy to move customers toward self-service options that involves video tellers, enhanced ATMs, and fewer branches with smaller footprints and fewer staff hours. Retail Direct was described by Stein as a plan to “develop and refine efforts on both the digital channels and digital payments fronts.”
Associated’s mobile app launched in 2011, but was not actively promoted by the bank until 2012. It includes the expected features such as check deposit and P2P payments, but it also includes features that are regrettably rare in bank apps today, such as text chat. “We’re thinking a lot about communicating by text,” Stein said. “When to be proactive and when to be only reactive. We’re examining our current customer experience with that in mind.” Proactive in this case would mean text alerts with offers, balance reminders, and the like.
The company is also active on social media channels. Today, it has 4,800 Twitter followers and nearly 13,000 Facebook Likes.
Associated is committed to being a fast follower rather than a test case. “But we’re a very fast follower,” Del Moral-Niles said. “We went live with Apple Pay just a week after Wells Fargo.”
Del Moral-Niles emphasized that Retail Direct meant focusing on executable digital efforts, such as allowing customers to complete a loan application online and get a rate lock.
“It needs to be a solution to pay and fund that transaction,” he said. “Sending them back to the branch defeats the purpose.”
Associated is a Fiserv bank. A year ago, for example, Associated added Fiserv’s Mobiliti tablet banking app.
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