Despite banks‘ nudging toward online tools, many U.S. customers are not ready to give up regular visits to their nearest branch, complicating the industry’s efforts to slim down.
U.S. banks have trimmed the number of branches by 6% since it peaked in 2009, according to Federal Deposit Insurance Corp data. The 93,283 branches open at the end of last year was the lowest level in a decade.
Yet analysts who have examined the data say banks should have done more to offset the pressure on revenue from low interest rates and regulatory demands.
The number of FDIC-insured banks has fallen by more than 25% over that time even as industry assets have grown, indicating room for greater branch consolidation.
Bank executives argue, however, that branches remain crucial for acquiring new customers and doing more business with existing ones. Closures, they say, would hurt revenue more than help reduce costs.
“Our customers still want to visit us,” Jonathan Velline, Wells Fargo’s head of ATM and store strategy, told Reuters in an interview. “They’re still coming to our stores and our ATMs at pretty consistent rates.”
Bankers across the industry share that view. They say online banking complements traditional services for U.S. customers, but few have gone fully digital.
Banking customers’ desire to be able to access their local branches remains strong. This is occurring while an increasing number of transactions occur via online and mobile banking and through ATMs. This trend is consistent with Mercator Advisory Group Banking Channels research, which has found that customers and members strongly desire the option of having face-to-face contact at a branch — when and where desired — even though many want to access self-service banking for basic transactions. This access to subject matter experts, even if only occasionally, can be an important driver of customer satisfaction and increased product deepening and long-term loyalty.
Overview by Ed O’Brien, Director, Banking Channels Advisory Service at Mercator Advisory Group
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