As its customers increasingly adopt digital banking, OceanFirst Financial in Toms River, New Jersey, said it would sell or close about 30% of its branches and reinvest much of the proceeds in new technology and tech-savvy staff.
“And once they break that digital barrier, they don’t go back” to routine branch banking, Maher said in an interview, noting the efficiency of online banking.
The pandemic amplified and accelerated a shift already well underway, making it necessary for banks to reduce traditional real estate costs and invest savings in evolving technology, he said.
OceanFirst already has a fast-growing video banking service, an online investment platform and an expanding team of digital bankers who are gradually supplanting conventional branch staff, Maher said. The bank is looking ahead now to cryptocurrency services, he said.
Meanwhile, foot traffic is down more than 15% at many branches when compared with prepandemic levels, he said.
Maher said the bank plans to sell two branches to the $2.4 billion-asset First Bank in Hamilton, New Jersey. Those branches are in Flemington and Monroe. OceanFirst will close another 20 branches in other locations. The process will play out over the course of the fourth quarter and early 2022.
On an annual run-rate basis, the branch consolidation plan is expected to generate $7 million to $8 million in savings.
About 50% of the savings will go to digital investment, including a new “digital care center,” where video bankers and customer service staff focused on digital services will work and collaborate. The other 50% falls to the bottom line and supports earnings, Maher said.
“If you’re not investing now” in digital, “you’ll get too far behind and never catch up,” he said.
Over the 12-month period that ended July 31, the U.S. banking industry closed 4,410 branches, leaving 81,963 active U.S. branches, according to S&P Global Market Intelligence data.
