🔒With apps and online banking, what’s the role of the local bank branch?

Banking customers have been spoiled by direct deposit and online banking, and once the pandemic hit, online banking for customers crystallized.

The pandemic forced branch customers to go online and use the mobile app, creating new habits for meeting basic banking needs.

While online banking might be useful and quick — it allows you to check your balance, pay bills and control your card all with a few simple clicks — it raises the question: What’s the role of the local bank branch? And why are there still so many?

While the number of bank branches in Maine is fewer than it was in, say, 1994 (see chart), the amount of deposits has quadrupled.

Jim Roche, the president of the Maine Bankers Association, told Mainebiz that bank branches continue to play a vital role in providing financial services to communities and customers all over Maine.

“There are well over 400 bank branches and related offices embedded in communities across the state,” says Roche. “Branches help build trust and are often a sign of community stability.”

Mainebiz spoke with Maine leaders about today’s banking environment, customer preferences and bank strategy. Here’s what they had to say.

Customer experience is key

While digital solutions plays an important role in banking today, when customers have life events or challenges, they look for personal help and guidance. That’s the role of the local bank branch. Branch teams work closely with customers to offer personalized service, helping them solve more complex financial needs and providing hands-on support for any issue.

Darci Hamm, chief operating officer at Norway Savings Bank, says customers value having their “go-to” branch employees dedicated to providing the best customer experience.

Technology is there to make banking more accessible and convenient, but it won’t replace most people’s need for knowledge and expertise.

“When planning for the many life moments, customers want to talk with our financial experts who can help guide them along the way,” says Hamm. “You don’t get the same level of personal attention and support from your device alone.”

Investing in both digital and physical branches

Hamm says that in banking, there’s a term called the “network effect,” a phenomenon wherein large branch networks capture a disproportionate share of deposit market share and balances. The idea is that banks with more physical presence capture more deposits.

The expansion of the Norway Savings Bank branch network started in 2001, with the acquisition of Coastal Bank — doubling the number of branches and bank assets. Since then, the bank has added seven branches and will open its 25th branch and first in New Hampshire (in North Conway) in 2025. The bank continues to grow its customer and deposit base through branch expansion.

“From a customer and community perspective, branches are integral to ensuring our communities remain strong and have the support they need to thrive,” says Hamm. “Having employees who live, work and play in Norway Savings Bank’s footprint helps us stay connected to the needs of our customers and broader communities. Our employees volunteer their time and talents to hundreds of local organizations throughout our markets, which adds value beyond technology. Having multiple locations makes that personal touch even more accessible.”

At Camden National Bank, Simon Griffiths, president and CEO, says the bank’s digital banking logins grew to 22.6 million, a 17% increase over the previous year, while branch transactions decreased by 5% from the previous year.

This indicates that the role of a branch remains significant despite the increased interest and reliance on self-service channels, such as the bank’s mobile app and online banking tools.

“The branch facilitates exceptional in-person conversations that provide personalized financial guidance for moments that matter, such as buying a first home, saving for college or planning a retirement,” says Griffiths.

“The branch’s role,” he adds, “is to provide strong financial advice from knowledgeable bankers who live and work in the same communities, deepening customer relationships and enabling tailored financial guidance delivery.”

Griffiths says that having multiple branches allows the bank to be more accessible to customers, whether the location is in their community or near their place of work. Providing a branch network throughout the state is essential with a large geography such as Maine.

While Camden National continues to invest in physical branches, it has also invested significantly in technology to provide customers with safe and reliable online banking access. Using biometrics and additional forms of multi-factor authentication, the bank continues to assist and educate its customers to keep their access convenient and secure.

“It’s just a matter of convenience,” says Griffiths. “We know our customers are busy. We work to ensure they can take care of their day-to-day banking and larger financial objectives the way they prefer.”

What are the key functions of a local branch?

The key functions of the branches have remained relatively unchanged over the last decade, although transaction volume has certainly slowed.

Like many Maine-based banks, Machias Savings Bank still handles cash for withdrawals and deposits, counts change, opens accounts, provides loan and credit services and offers specialized business services. It still has ATMs and safe deposit boxes at many locations. Its staff still engages in the community through volunteering and donations to nonprofits as part of its investment in the community.

Ben Jordan, the chief operating officer at Machias Savings Bank, says that the branch’s role has shifted to being a digital service and financial advice center.

“Often, we are educating customers on the latest online products, helping with identity theft issues, providing card replacements and helping businesses to set up merchant services for credit and debit card payments,” says Jordan.

“Although our goal is to be able to offer the same in-person services digitally, we understand the need for human interaction too,” he says. “Talking with a chatbot through artificial intelligence is easy, convenient and gaining in popularity. We are adopting more AI technology every day. And yet, there are still humans behind the computers and you can still find those same knowledgeable humans in our branches across Maine.”