The State of Branches In The Age of Automated Banking
This extensive, must-read briefing on branches from Bancography tackles everything from transaction declines and location closures to consumer preferences and cross-selling.
The rise of electronic transaction channels in banking has raised fundamental questions about the role of the traditional branch. As consumer preferences evolve and new channels emerge, bankers must consider how the traditional branch fits into their distribution network.
This briefing from Bancography examines the state of branch banking in the U.S., trends in branch activity, and the impact of new technologies to assess the role of the branch in an age of rising electronic channel availability. The bottom line? Branches remain the predominant channel for new account sales, and location convenience remains paramount in institution selection.
Financial institutions shouldn’t view the migration of transactions to electronic channels as a threat to branches, but rather as an opportunity to reorient them toward higher-value sales activities. The combination of reduced staff requirements and new technologies makes smaller, less expensive branches a reality, yielding more viable locations for expansion, which in turn provides consumers with the convenient access they want.
Are Branch Networks Really Shrinking?
The middle part of the last decade saw unprecedented levels of branch construction. Banks and credit unions built more than 5,000 new branches per year in 2005, 2006 and 2007, with branch inventories increasing by 3,000 units (net of closures) in each of those years. Although the pace of construction slowed significantly during the economic downturn, there are still 118,000 bank and credit union branches in the U.S. now, or roughly one branch for every 1,000 households in the nation.