Banks, credit unions steer back to drive-thrus

DFCU Financial in Dearborn, Michigan, has 34 branches, and 32 of them have drive-up lanes.

The COVID-19 pandemic made drive-thru banking relevant enough to have convinced banks and credit unions that the service should be a part of any new branch construction.

Although the vast majority of branches across the U.S. are equipped with drive-thru lanes, many financial institutions were moving away from adding them to new locations just prior to the coronavirus pandemic.

That was due primarily to the decrease in the overall volume of transactions at branches and the added cost of building those lanes onto the brick-and-mortar locations, said Glenn Grau, senior vice president of sales for the Pittsburgh-based branch design company PWCampbell. Depending on the number of lanes, putting in a drive-thru can add between 8% and 12% to the total cost of a branch, Grau said. 

The technology firm Fiserv is also observing a greater demand in drive-thru banking, as its clients also seek to implement remote teller functionality in those branches to keep costs in check.

“I think eliminating drive-thru capabilities was in part cost reduction — you can reduce your space requirements as well as technology costs — but also one based on transaction activity trends,” said Bill Handel, chief economist for Fiserv.

Grau agreed that after many branches without drive-thrus were forced to shut down in early 2020 at the start of the pandemic, banks and credit unions didn’t want to be caught unprepared again.

“So now it’s a must to have a drive-thru,” Grau said.

And although transactions in branches are declining, the drive-thrus are handling the majority of those that remain — as much as 70% of branch transactions for some institutions occur in the drive-up lanes, according to Grau.

It may be even higher for some banks and credit unions in regions such as the Northeast, where customers prefer to stay in their cars during a cold winter. 

One of those Northeast institutions is the $896 million-asset Saratoga National Bank & Trust in upstate New York.

Saratoga’s President and CEO David DeMarco said the bank always felt the drive-thru was a critical piece of a branch, and that although future branches will get smaller, they will always include a drive-thru.

“The pandemic forced many customers to the drive-thru, and many still like that option or maybe just got comfortable with it,” he said. 

DFCU Financial in Dearborn, Michigan, prioritizes drive-thru options — including at new branches — especially when there is a retail focus in those locations, said President and CEO Ryan Goldberg.

In an interview, Goldberg said the $6 billion-asset credit union continues to see a balanced volume of transactions between the lobby and drive-thru. 

“While we are seeing overall branch transactions decline as members gravitate to more self-service options, drive-thru banking remains popular,” he said.

DFCU recently opened its 28th branch in Michigan, giving it a total of 34 branches. In January, the credit union finalized its acquisition of the $689 million-asset First Citrus Bank in Tampa, Florida, and now has six branches in that market.

Goldberg said 32 of its 34 branches have drive-thru lanes.

When branches are built in downtown locations, installing a drive-thru is sometimes tricky because of space limitations, Goldberg said. In those cases, the primary driver of branch growth is usually commercial banking, wealth management or mortgages because the interactions with members are more focused on face-to-face conversations, given the complexity of the products and services being discussed, he said. 

Grau said site selection is also important for banks and credit unions moving into strip malls. Without an end unit, there’s no drive-thru option, he said. 

For Saratoga, lobby transactions outpace those at the drive-up windows, and DeMarco said those exterior lanes see more traffic today than pre-pandemic.

“But that doesn’t include drive-up ATM transactions, which have been declining for years as fewer folks use cash these days,” he said.

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