Area banks are embracing the push toward mobile banking, pumping money into new technology and changing the way they operate.
Several local banks are growing by opening new branches. Berkshire Bank, Kinderhook Bank, Pioneer Bank and others have plans to expand in the region.
But some banks are questioning the payoff of opening more branches as customers opt to bank on their smartphones and tablets.
“Banks are torn with opening new branches. They think bricks and mortar may be a thing of the past,” said Steve von Schenk, executive vice president of The Adirondack Trust Company in Saratoga Springs. “They are very expensive, especially with the option of mobile banking.”
Adirondack Trust recently invested millions of dollars in a complete makeover of its core system, which is the heart of the bank’s operations, controlling its accounting, loan and teller systems.
The company’s Web-based system, developed in the 1990s, was also updated last year. It enables customers to complete remote banking transactions and also includes a mobile application.
“Technology is huge for us this year,” von Schenk said. “We are taking an old core system and completely converting it. It’s an 18-month project and it’s a major undertaking for us, but it will be so beneficial and efficient.”
Depositing money is also made easier with advancements in ATM technology. ATMs can now do more than spit out a wad of cash; they can also eat a wad of cash.
Kinderhook Bank’s ATMs in East Greenbush can accept up to 30 bills at a time. That means customers can deposit a total of $3,000 with the push of a few buttons.
Jeff Stone, senior vice president of retail and business development at Kinderhook, said banks have to be geared to service customers in the most convenient way possible. And waiting on line to hand money to a bank teller is not the most convenient option.
“People want to bank when they want and how they want it,” he said. “The technology is outstanding today with state-of-the-art ATMs. Customers like that focus on service and want access to technology. ”
With more banking being done online, some banks are adapting by changing their branches inside and out to enhance customer service.
Adirondack Trust opened its newest location last February in Ballston Lake. The new branch marked the company’s first environmentally friendly bank with solar panels, high-efficiency LED lights and concrete flooring that absorbs and radiates heat.
“We are trying to make the branches a better experience. Our most recent branch does that through the use of technology,” von Schenk said.
Adirondack Trust has a total of 12 branches with 250 employees. It is the largest independent community bank in Saratoga County, with $1 billion in assets, and is still growing: Total deposits grew 1.3 percent to $785 million over the past year and total loan balances climbed 12.7 percent to $568 million.
But von Schenk said Adirondack Trust is not planning to open another branch in the near future.
“I do see us expanding, but I don’t see it happening at a rapid pace,” he said. “If an opportunity comes up where a new location makes sense, I think we would do that. But I don’t see us doing much of that due to the cost and the mobile banking option.”
At the same time, Kinderhook Bank is preparing to open a seventh branch on Route 7 in Latham. Stone, who is in charge of looking for and opening new branch locations, said he thinks there is a real opportunity for small local banks in the region.
“There is a lot of competition and a lot of banks, but it is also a growing market,” he said. “It is really all about having good people and delivering good service. I think everyone can grow here, but you want to grow a little faster than the competition.”
But it’s not always about the competition. The region’s banks often work together to deliver large loans to businesses.
Adirondack Trust can do loans up to $15 million, von Schenk said. But anything larger than that amount would have to be split between banks.
“We have some competitors in the community, but we also found that we could pair up with them if there is a deal that’s too big for any one of us,” he said. “If there is a larger loan and it’s a good loan, we will invite some of our competitors to share that big loan.”
Banks are pointing to computer chip manufacturer GlobalFoundries in Malta and the College of Nanoscale Science and Engineering in Albany for that big business.
“A lot of that is driven by what is happening in Malta and Albany with the tech initiative and the amount of investment coming into this area,” von Schenk said. “All of that spills over to the community and then spills over to loan demand, which has been very high.”
Hugh Donlon, president of KeyBank’s Capital Region market, which includes 50 branches, said he’s looking at those growth areas for future expansion.
“We’re looking at those areas and trying to make decisions around where best to build new branches,” he said. “We are looking at the Malta area and the Saratoga market as its development continues to rise.”
Even with the push toward mobile banking, Donlon said, there will always be a need for physical branches. But how those branches operate will change.
“You will begin to see branches and service locations pop up where clients can come in and get that customer service that is highly automated and largely self-service,” he said.
Clifton Park software company Apprenda develops code that enables its customers to perform computer applications, such as ATM transactions. The company’s customers include banks such as JP Morgan Chase.
Abraham Sultan, co-founder and vice president of engineering at Apprenda, said banks have to adapt to changing technology or face consolidating its branches.
“Adirondack Trust has been one of the local banks that’s aware of this software trend and is looking at different options,” he said. “Banks will see some consolidation or they will have to adapt. I believe most will adapt.”
But will physical bank branches be around forever? Sultan said they could phase out over time.
“Technology and the Internet is a disruptive fact of life, not just with banks but with every industry,” he said. “Whether bank branches will always be around? That is something I wouldn’t bank on.”
Reach Gazette reporter Haley Viccaro at 395-3114, email@example.com or @HRViccaro on Twitter.