Digital Services Mean Every Bank Is a National Bank

Pittsburgh-based PNC Financial Services Group is making a significant digital push this quarter, and highlighted a number of areas this is benefiting the bank’s consumer business.

But the most significant revelation from the company’s earnings call yesterday may be the CEO’s statement that digital banking allows any bank to become national.

Here’s CEO Bill Demchak:

I would tell you that as our clients increasingly become digital, there is a storyline that suggest that on a digital basis, we are national today and those markets become relevant to us on a retail basis through digital, but not in the traditional retail sense.

PNC’s retail footprint covers much of the Midwest, the mid-Atlantic region, and the Southeast. In addition, it also has centers specializing in commercial loans and mortgages in New England, the Southwest, and West Coast — so while Demchak’s point is a good one, PNC is already essentially national.

The bank is cutting branches, however, which (at least in theory) frees up funds for digital banking. The bank reported 2,481 branches this quarter, a reduction of 1.1% (2.501) on the quarter, and down 4.6% (2,601) year-over-year.

Bank of America Corp. has similarly reduced its branch network. It reported 4,542 branches this quarter, down 0.4% (4,559) versus last quarter, and down 2.9% (4,681) since this time last year. Bank of America noted it conducted 1 billion digital interactions with its customers this quarter, and saw 21% of deposits through mobile devices, the equivalent, CEO Brian Moynihan noted, of 1,000 branches at 10% of the cost. Moynihan also reported loan sales on digital devices increasing 22% this quarter.

Demchak also noted the digital successes for PNC, including an online lending product launched last quarter.

“We have booked nearly $100 million in new loans as part of our digital consumer unsecured installment loan pilot since the fourth quarter launch,” he said. He also cited “enhanced capabilities” in the bank’s digital home lending offerings. Further, 52% of PNC’s consumer deposits came through self-service channels, including ATM and digital.

PNC and Bank of America are huge banks with massive resources and highly refined digital offerings. What about the thousands of other banks out there? Clearwater, Fla.-based Flagship Community Bank, with just $113 million in assets, went all in on mobile, buying the digital-only BankMobile from Customers Bank for $175 million this spring. Most banks will not make a move anywhere near as dramatic, but that is the direction for most banks from now on.

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Philip Ryan is Senior Editor of Bank Innovation and Senior Director of INV Fintech. He began covering financial services in 2012 and has more than 15 years' experience in online journalism, which makes him quite old. He can be reached at

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