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VOL. 130 | NO. 252 | Tuesday, December 29, 2015

Memphis Banking Officials Brace for Changes In New Year

By Andy Meek

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As he chatted about the Memphis banking market with a few guests in a conference room at his bank’s headquarters on Quail Hollow Road back in 2010, Magna Bank chairman, president and CEO Kirk Bailey looked into the future and imagined how local mergers must surely be on the way.

It was in response to a comment about how skewed the local deposit share percentages have remained for years. First Horizon, Regions, SunTrust and Bank of America have long claimed the lion’s share of customer deposits in the Memphis market, with the rest of their competitors – like Magna – splitting up the rest.

Bailey’s assessment that consolidation was the inevitable outcome took on a degree of prescience earlier this year. In fact, his own institution was snatched up by Nashville-based Pinnacle Financial Partners, a bank with $6.3 billion in assets that hung its signs above the door at Magna’s Memphis locations last month.

Pinnacle’s entry into Memphis by acquiring Magna was, to be sure, one of the bigger banking headlines of 2015. But it’s also somewhat instructive when considering – what do the next 12 months hold?

When what had been the third-largest bank based in Memphis – Magna, behind First Tennessee and Independent Bank – decides to hand the keys over to a new out-of-town corporate parent rather than continue to go it alone, it’s indicative of how much different industry change looks today than it did a few years ago.

Coming out of the recession, for example, one of the prevailing local themes was to think small. Community banks talked up their personal touch. Regional banks tried their own version of the same thing, painting themselves as big banks with a small bank style to go along with their large balance sheets.

That playbook is a little different these days.

Case in point: the philosophy around the branch footprint.

Gone, of course, are the heady go-go days when branches were as commonplace as Starbucks locations. For some institutions – like Iberiabank, which is building a new standalone branch at 2504 Poplar – the answer is prominence for their real estate.


For others – like Triumph Bank, the newest branch of which is tucked in a strip center in Germantown – the answer is to go smaller and sleeker.

“Our decision process probably hasn’t really changed,” Triumph CEO Will Chase said. “We want to be on a major thoroughfare. We want to have visibility.

“But our concept going forward – it’s not going to be a 4,000-square-foot, standalone, single-purpose type of building,” he said. “It’s probably going to be a bay or two inside of … a shopping center. Which is a totally different capitalization cost.”

Change today, meanwhile, also means more than offering better rates or new products to compete. (First Horizon CEO Bryan Jordan is fond of pointing out that “Our money isn’t greener than anyone else’s.”) That reality is leading local institutions of all sizes to rethink the entire banking experience.

Teller rows are going away, replaced by so-called “universal bankers.” Branches will continue to shrink, a reflection of declining foot traffic.

Customer activity inside the branch always tended to be transactional. But when much of those needs can be met with a smartphone, what then?

Low fees, a robust ATM network, convenient branches and a website with plenty of bells and whistles might have been customer draws at one time. But they don’t mean as much today for an institution whose mobile presence is subpar.

This is also one reason why, inside the branches themselves, concierge-style banking is now en vogue. That paradigm can take different forms, but it tends to feature a kind of greeter who spots customers approaching the door and is able to instantly handle any request they have or task they need done.

It’s also why local banks have been moving to improve their mobile offerings, giving customers options like the ability to snap a photo of check and use that image to remotely deposit it into an account.

As banking moves to a new platform, security concerns follow. Look for those to continue to factor prominently in 2016 and for more local banks to issue new chip cards that purport to offer a greater deal of protection than existing customer plastic.

Another of the themes we were reminded of in 2015: anytime an industry is undergoing a platform shift, it’s a challenge – but the ride is a little less rocky the deeper your pockets are.

Magna/Pinnacle, for example, now has a deeper suite of resources and professionals with which to go after more business than would have been possible before.

Regions and First Tennessee will continue their battle for the top spot in the Memphis market customer deposit ranking – something First Tennessee continues to have a lock on here in its home market.

Separate from that, Regions rolled out the debut recently of its video teller service. Video tellers are available during extended hours and connect customers with a Regions representative via live video chat.

In addition to processing most teller transactions, these “video bankers” can help customers with account maintenance and general questions.

In short, it’s an industry that remains ingrained into the daily lives of consumers. But 2016 will see everything about banking in Memphis continue to change – from where we go to do it to how we do it once we’re there.

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