“Digital First or People First?”

Recently, I watched an interview on Bloomberg TV with Gonzalo Luchetti, head of U.S. Consumer Banking for Citibank. The interview was conducted in Citi’s brand new gleaming 7,000 square foot flagship branch in Manhattan. Who said branches are dying? But when asked about Citi’s ambitions regarding new future branches, Mr. Luchetti smoothly pivoted to focus on the bank’s “Digital First” model while conveying how branches are an important complement to that strategy in the markets they value. “We’re interested in doubling down in core markets,” he said. “We see the value of the branch for high value interactions.” To me, this sounded like code meaning if you’re a high net worth customer in LA, NYC, Chicago, et al, Citi will be right there for you. If not, visit us online. And then he said it. “There is a diminishing value in physical locations as it relates to low value transactions in low profile markets.” There it was, the core difference between big retail banks and community banks. For Citi and others, customers are only as valuable as their net worth and assets. For community banks, customers are valuable as humans. I’m not naïve. Just like large retail banks, community banks also need to generate revenue and operate profitably. But since their inception, community banks were created to provide financial support and services that are accessible and affordable. Face-to-face, coast-to-coast, in markets both large and small assisting members reflecting the full spectrum of incomes and assets. I wish Mr. Luchetti and Citibank luck with their “Digital First” platform and have no doubt they and their shareholders will be financially successful. It is also likely they won’t miss the customers who will transfer their deposits to community banks where — while offering all the digital services of retail banks — are holding on to their core value of “People First.” Personally, I see an opportunity to further penetrate markets that are not of interest to the big banks and to serve those that are woefully underserved.