Fintech Automation Revolutionizes Regional Banking

OceanFirst closes branches, expands digitally to succeed in tough Eastern Seaboard bank markets.

Few businesses have benefited from the digital revolution more than financial services. And now, at the end of a cascading effect that began decades ago with the digitization of Wall Street and other big financial markets, regional and local banks are finding ways to automate their customer-facing services as well as their back offices.

For significant regional players such as OceanFirst, a Red Bank, New Jersey-based bank holding company with more than $11 billion in assets, their automation push is enabling them to punch above their fighting weight in competition with big national banks at the same time that they’re cutting costs in traditional expense areas including branch offices.

“There’s a growing tradeoff between technology and labor in our business,” OceanFirst CEO Chris Maher told “Labor has become more expensive much more quickly than technology has, which means that things you might not have automated in the past, you might absolutely do that now.”

For example, OceanFirst increasingly has found that the bank’s “customers are very happy using apps to do a wide range of things now,” he said. “It’s similar to how, in restaurants now, you can basically order for yourself. Our customers are making their loan payments and doing other things online that they wouldn’t have done in the past, and they like that control. They also like the ability to do it any time of day.”

Partially as a result of this digital-automation push, Maher said, OceanFirst has consolidated its 114 physical branches of five years ago into only 37 branch offices today in its market that stretches from Boston to Washington, D.C.  That move included a branch-count reduction of 40% in 2021 alone.

“That brings our costs down and leaves us with lower labor costs,” Maher said. “And now we’ve got close to 100 people in our digital-banking and customer-care group, centralized in a new building. They have tools and technology to do things over video. They can handle drive-up ATM machines with a video connection with the customer. We have 41 sites that we run from one central group.

“It’s a wildly more efficient way of providing customer service out in the field. We spend on digital, and our customers use and embrace digital video, so we can consolidate branches and hire people in our video-banking group — but net-net, there are fewer people in our bank.” 

In turn, Maher said, OceanFirst can redirect into marketing some of the spending that previously was dedicated to maintenance of physical branches and workforces there; branch networks traditionally have been a huge marketing presence for regional banks, sort of like having outdoor billboards scattered around town.

“Without as many branches, we have to be spending on marketing in other channels,” he said. “So we are doing a variety of advertising online. We have done digital-only advertising campaigns and have opened a significant number of customer accounts over the mobile phone. Now we do more of that than accounts that we open in any of our branches. And if customers are coming in that way, we are active in social and local media—we can be very targeted these days. We also purchase cable-TV spots.”

On the labor side, OceanFirst also has been adding to its sales force of mortgage bankers who aren’t attached to physical branches but rather visit customers at their workplaces. “They go out and pull people in, not sit in a branch and hope people walk through the door,” Maher said.

OceanFirst’s recent expansion in the Philadelphia market exemplifies how its automated push succeeds. “We started three years ago, and already we’ve built a $1.3 billion [business] there,” Maher said, including $100 million in new customers in the last six months. The bank finally opened a physical branch late last year.

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