Are Pocket Branches the Alternative? (They’re not what you think)

by. Joe Swatek

Are pocket branches a big part of banking’s future?

I’m not referring to the cell phones your customers carry in their pockets and use for mobile banking. I’m talking about size. And as the old saying goes, size matters.

So what does “pocket” mean for banking?

The British came up with the term “pocket battleship” to refer to pre-WWII German ships that were as heavily armed as the powerful dreadnought battleships, but constructed smaller and much lighter weight.

As a kid, I built plastic model kits. Ship kits made me aware of that meaning for “pocket” — just as effective, but leaner and smaller.

With that definition in mind — just as effective, but leaner and smaller — would pocket branches answer the debate over the future of branch banking?

Proponents of branches say the physical presence is absolutely necessary. People want to talk face-to-face with other people and conduct their banking transactions in a physical place.

Opponents claim the costs of operating the buildings swallow up a hefty chunk of the financial institution’s profits. Besides, branches are underused. Banks and credit unions have driven their customers and members toward other avenues of banking. Online banking and bill pay. Mobile banking. ATM transactions. Remote capture. Opening new accounts online. Branches are becoming obsolete.

Personally, I lean toward the opponents’ viewpoint, but I don’t go so far as to assume all branches will or should disappear.

As you might imagine from what I wrote at the start, I believe the pocket branch should replace most of today’s oversized and underused branches.

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