Will Bank Branches Wither Away?

by Mercator Advisory Group 0

There are no brochures — this is a green building, so unnecessary paper is discouraged. Bank employees use a wall-mounted computer screen to show customers different types of checking accounts and other bank products. Customers who need to wait for assistance can use one of the branch’s computers to review their online accounts or log onto their own computers in the Wi-Fi lounge. The branch, similar to Citi’s flagship branch in New York, is designed to create a “friendly environment” for tech-savvy people and increase Citi’s footprint in the Washington metro area.

But before Citi can demonstrate the branch’s smart technologies, it has to get customers to walk in the door. That’s a significant challenge for Citi and other banks with branch networks, because it’s easier than ever for bank customers to conduct most, if not all, of their bank business online, on their smartphones or at an ATM.

In the past year, the number of bank customers who prefer to bank online has jumped sharply, according to a survey conducted in August by the American Bankers Association. Sixty-two percent of bank customers said they prefer banking online to all other methods, up from 36% in 2010. Only 20% of customers said they preferred using a branch, down from 25% last year.

Perry Miller, 55, of Claremont, N.C., falls into that category. He closed a bank account with Wells Fargo awhile ago in favor of a credit union and brokerage accounts with Schwab, Fidelity and Vanguard. Miller, pastor of the Bethlehem United Methodist Church, conducts nearly all of his transactions online or through an ATM. When he needs to deposit a check, he takes a photo with his smart phone and deposits it electronically into his Schwab account. “Who needs brick-and-mortar and a teller?” he says.

Other customers, though, still value the human touch. Margaret King, 64, director for the Center for Cultural Studies & Analysis in Philadelphia, has an account with Wells Fargo because she likes having access to branches across the country. “I need the ability to walk into a 3-D bank and talk directly to staff there with checks, documents or bank statements in hand to resolve any problems,” she says. “This is much harder to do in the online world.”

With the evolution of branches well underway, including the advent of significant process and technological changes within banking, it might be tempting to predict the demise of branch banking. However, as has been seen in the past, banking channels tend to evolve over time, yet remain needed and relevant in their new form.

Even with the availability of such self-service capabilities as intelligent deposit ATMs and RDC (Remote Data Capture) check deposits, many customers still value the ability to visit a local bank branch when needed.

A recent Mercator Advisory Group report reinforces this point. The report, entitled “Consumer And Retail Banking Channels: Old Channels Never Die,” found that 91 percent of consumers surveyed expressed satisfaction with transacting business with a teller at a branch.

All of this suggests that, while the number of branches may be reduced because of economic and technological factors, the majority will remain. The personal touch is desired by many customers, as well as being a significant opportunity for financial institutions to differentiate themselves. Without a branch presence, cross-selling and small business growth opportunities would be significantly reduced.

Read full article: http://www.usatoday.com/money/perfi/…hes/51244020/1