Why Republic Bank is Expanding While Others Close Branches

(Photo by Jared Shelly)

While technological advancements have brought an incredible amount of disruption to nearly every industry, from banking to insurance and even taxi cabs, one basic business principle remains the same — it’s all about the customer. In the digital age, where competition abounds as traditional barriers to entry disappear, providing an elite customer experience is often the No. 1 brand differentiator and a key driver of business growth. Emphasizing this point, a recent six-year study of publicly-traded companies that have mastered customer engagement (measured by Forrester’s Customer Experience Index) found that these businesses outperformed the S&P 500 index by a factor of three to one.

In the banking industry, particularly over the last decade, technology has enabled customers to easily and conveniently handle many routine banking transactions from home or even on-the-go via their smartphones, rather than visiting their local branch. As a result, according to SNL Financial, 1,462 branches shut their doors in 2014, and Pennsylvania ranked second on the list with 92 closures. The prevailing, albeit misguided, wisdom among my banking peers is that retrenching from the communities we serve makes sound financial sense. In reality, although this cost-cutting strategy might improve a balance sheet in the short term, the importance of face-to-face interactions and providing an incredible in-store experience remains unchanged.

Even millennials, largely the most digital savvy demographic, still find great value in the financial expertise and unmatched convenience their local bank offers. A survey released by J.D. Power in May revealed that 76 percent of 18 and 19 year-old consumers had visited a bank branch in the past year, the same pace as previous generations. Equally important, a broader survey conducted by Bankrate.com determined 50 percent of Americans had visited their local bank at least once in the last 30 days.

At Republic Bank, while staying at the forefront of digital banking by offering customers a full suite of mobile banking services, we are taking a contrarian approach when it comes to our physical presence, investing heavily into expanding our regional footprint and the extensive training of our employees. Our significant growth in the Philadelphia region — most recently through two stores opening on the same day in Marlton and Berlin, N.J. — allows our customers to be better served as we expand into and around their communities. Since 2014, we’ve opened stores in Cherry Hill, Voorhees and Glassboro, renovated our flagship store in Center City Philadelphia and relocated a store in Media, Pa. We have invested in 17 total stores — including an upcoming relocation in Wynnewood, Pa. – and welcome all members of the family, even pets. Keeping the momentum building, we plan to open more than 10 additional new stores by the end of 2017.

Of course, Republic Bank isn’t the only brand realizing the importance of brick-and-mortar stores and the personal interaction they help foster. In fact, many people forget how revolutionary it was when Apple announced the opening of its first retail store. That wildly successful experiment was instrumental in cementing Apple’s reputation as the world leader in consumer technology, and left the competition such as Microsoft scrambling to try to keep up.

While it’s critically important to embrace technology (and at Republic Bank we are investing significantly in innovative digital solutions) it should be viewed as a complement, not a replacement for the personalized customer service inherent with the in-store experience. When considering a recent American Express survey found more than two-thirds of American consumers are willing to spend more on average with a company that delivers excellent service and 46 percent of all respondents said they always tell others when they’ve experienced good service, it becomes pretty clear that this approach is a great way to grow a business while turning customers into brand evangelists.

At Republic Bank, while we will continue to embrace and adopt the latest and greatest technologies, one thing will never change, our philosophy that building long-term customer relationships and brand value starts with an old fashioned handshake and a smile.

Harry Madonna is the Chairman and Chief Executive Officer of Republic Bank.