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SunTrust to invest more in front-end tech, but says branches not 'dead'

SunTrust Banks Inc. is planning to heavily invest in its front-end technology, but that does not mean the company is done with branches.

Speaking at a June 1 Bernstein Strategic Decisions Conference, Chairman and CEO William Rogers Jr. said branches are not "dead." Rogers said over the next two years, the company's branch network will be down about 10%. He called the company's branch optimization strategy a "unique opportunity for the company," since the company tends to be concentrated in growing, urban markets.

"It's a lot different being a small market and you've got two branches and you close one," he said. "That's a big difference than [if] you [have] 200 branches and you close 10, because you can really achieve the efficiency, and attrition is lower."

Rogers said he is a fundamental believer that branches will "just be a different part of the ecosystem," as the company invests in technology that is relevant to clients and that customers want to utilize.

"And we've taken virtually every dollar that we've saved in the branch consolidation and reinvested that in technology. So that isn't sort of the efficiency gain necessarily," he said. "That's really almost a reinvestment vehicle."

Rogers called SunTrust a "very geography-based organization," and said the company is careful about not getting "over concentrated or overheated in a particular geography."

Compared to the company's peers, Rogers said SunTrust is "ahead in certain places in terms of our investments," when looking at the number of clients that use its deposit products.

"It's a lot of trying to create a seamless, relevant and client-friendly experience on the front end for the client," he added. "Because I think the back end, you can get some scale, you can borrow some scale, you can advance in a different pace. And we want to make sure that the front end is really, really relevant to our clients."

Over the next five years, Rogers said artificial intelligence robotics and cloud computing will have a "more material and recognizable impact."

"They're going to be pretty big changes and they can change it [on a] pretty big scale," he said. "Cloud computing [is] probably one of the bigger examples. ... Well, that changes in big chunks. That doesn't change in sort of minor sort of investment."