Retail banking trends to look out for in 2023

ITMs and VTMs are popular retail banking innovations among community banks.

What’s on the horizon for retail banking? We spoke with two community banks that have ramped up their services to meet—and exceed—the changing expectations of customers.

By William Atkinson


According to a new report from PwC titled “Retail Banking 2025 and Beyond” (see sidebar), the retail banking industry is undergoing tremendous change—but, of course, community bankers already know that.

“A few years ago, it was a fairly straightforward business, but today, technology and innovation, increasing competition, regulatory complexity, embedded finance, consolidation and evolving customer expectations are placing immense pressure on traditional business models,” the report said.

This intricate and evolving web of trends influences who consumers trust and how they prefer to conduct their financial lives. It also forces banks to address the fundamental question of what a financial institution is—and what value it provides.

So how are retail banks meeting this challenge?

Community banks are constantly looking to the future and identifying what customers want. One such bank is $1.7 billion-asset One Community Bank (OCB) in Oregon, Wis. It has introduced a plethora of new retail banking initiatives in the past couple of years, including online account opening for anyone in the state of Wisconsin. The community bank offers a variety of deposit offerings through its online account platform, which can easily be accessed from its website.

“We do thousands of video banker transactions every year. Clients appreciate the longer hours and the convenience of not needing to leave their cars but still being able to get service with a personal touch.”
—Jeff Versluys, One Community Bank

“Importantly, as we have created and launched new promotional products with preferred rates, we have made those products available in the online platform,” says Jeff Versluys, executive vice president and chief retail officer for OCB. The initiative is working. “The number of accounts that have been opened via this new channel has significantly exceeded our expectations.”

In addition, several of OCB’s locations in Dane County boast interactive teller machines (ITMs). Most are outside in the drive-thrus, but its new Middleton bank, which is situated in a walking community, has an ITM in the entry vestibule that’s accessible after hours.

“These can be used as ATMs but also offer video banker service,” Versluys says. “We do thousands of video banker transactions every year. Clients appreciate the longer hours and the convenience of not needing to leave their cars but still being able to get service with a personal touch.”

More VTMs to benefit customers

Gorham Savings Bank in Gorham, Maine, has also found that upgrading its teller machines has enhanced customers’ banking experience. By expanding its video teller machine (VTM) fleet, it efficiently provides extended banking hours to customers. “Every branch location now has a VTM, and we have added a terminal at a coffee shop in a community where we don’t have a branch, to add convenience for our customers,” says Dan Hancock, chief deposit officer.

The $1.5 billion-asset community bank piloted its VTM initiative several years ago, and it has expanded significantly over the past year.

“The primary objective was to extend banking hours for our customers,” Hancock says. “Our VTMs are open from 7:30 a.m. until 6 p.m. Monday through Friday, and the addition of the offsite terminal has helped to fill in a gap in our service area, giving our customers added convenience.”

By hiring a digital engagement specialist to help customers make the best use of mobile and digital services, Gorham Savings has increased the use of these products.

Overall, customer reaction to the community bank’s many initiatives has been positive. “We have seen an increase in mobile and digital usage, like other banks,” Hancock says, “but these initiatives have helped expand that engagement from balance inquiries and funds transfers to more complex needs like money management and managing debit card security.

“In addition,” he continues, “our offsite VTM has become one of our busiest terminals, so customers have appreciated being able to conduct their banking with a video teller instead of driving to a branch, and because they are speaking to a live person, the experience is more personal than using an ATM.”

Reaching customers

Of course, successful retail banking requires more than just technology. Earlier this year, OCB introduced its Colleague Banking Initiative (CBI). “We don’t take it for granted that a colleague will choose to do their banking with OCB,” Versluys says. “Many do bank with us, of course. However, to increase the number of colleagues who are also clients, we decided to educate and incentivize. As a result, we have been able to increase the percentage of ‘colleague/clients’ by 20%.”

“During COVID, we [built] a resource team that could connect customers with community resources to help them with a wide range of needs. We are now in the process of building out this knowledge and skill set in our branch teams.”
—Dan Hancock, Gorham Savings Bank

To achieve this, the community bank employed multiple strategies. First, it offered incentives to both new colleague/clients and those colleagues who were already customers before the initiative. The incentives included one PTO day for the current year and every year that the colleague remains a client, as well as drawings for $100 gift cards. Second, OCB created a dedicated CBI support team to help colleagues with banking questions, open new accounts and protect the privacy of their information. Third, it conducted multiple town hall live video sessions to help spread the word on CBI and answer questions.

As always, financial education plays a key role in deepening customer relationships. It’s an important focus for Gorham Savings Bank, which provides its customers with access to tools and resources to help them improve their financial wellness.

This began with its launch of Personal Finance, a software program that helps customers budget, track spending and manage savings goals. “We then expanded that by hiring a financial wellness coach to provide more personalized advice and guidance,” Hancock says. “During COVID, we expanded that approach by building a resource team that could connect customers with community resources to help them with a wide range of needs. We are now in the process of building out this knowledge and skill set in our branch teams.”

Expanding availability

Recently, Gorham Savings Bank began offering Smart Start, a Bank On-certified checking account to provide everyone in its community with access to safe and affordable banking.

“Part of our mission as a bank is to promote financial wellness, and we felt a responsibility to help our customers through challenging times,” says Hancock. “Since then, inflation has had a big impact, and being able to provide tools and advice to help customers adjust their budgets has been helpful.”


Retail banking of the future

Both One Community Bank (OCB) in Oregon, Wis., and Gorham Savings Bank in Gorham, Maine, have done a lot to expand their retail banking efforts, but they also have plans for the future.

“In keeping with our vision, which is to be ‘the Best Billion-Dollar Bank in the World,’ we must keep innovating to best serve our clients,” says Jeff Versluys, executive vice president and chief retail officer for OCB. “That means we’re looking at things like expanding the use of ITMs and enhancements to our core banking systems, including our online and mobile platforms. We want to continually make our client-facing systems easier to use and feature-rich.”

OCB is a big believer in developing the digital technologies that will serve its clients, but it also believes physical locations matter. “Earlier this year, we opened a new branch in Middleton, Wis.,” Versluys says. “We are actively looking at additional communities in Dane County and hope to have another new bank to open in 2023. In the future, we also will consider expanding into other parts of the state.”

For Gorham Savings Bank, one area of future interest is new partnerships. “We are continuing to explore relationships with fintechs, especially as it relates to fraud prevention and providing more value to our customers,” says chief deposit officer Dan Hancock.


Looking even further into the future

For community bank leadership teams, now is the time to better understand upcoming retail banking trends and prepare for a rapidly changing environment. A 2022 PwC report, “Retail Banking 2025 and Beyond,” cites an “urgent call to action” for retail banks. It points to three priority areas where banks should act immediately and proactively to adapt: tech-powered transformation, data-enabled customer focus and broad-based trust.

PwC’s analysis suggests several possibilities for how the next decade could unfold. According to the report, “Now is the time to consider radical future-facing scenarios to prepare to build the capabilities and resilience that will be necessary to thrive in tomorrow’s far more dynamic environment.”


William Atkinson is a writer in Illinois.