The “Death” of the Bank Branch

Written by Leon Majors, Senior Vice President

I would seriously like to have a dollar for every time I’ve heard that bank branches were dead in the last 30 years. The truth is, that while 2016 was the record year for branch closures, the net decline was 1.9%. That change was effected by 3,200 branch closures but, also by 1,300 brand new branches being constructed. The number of banks in the US declined in 2016 by 6.5%, so by extension, banks will all be gone long before branches (if math actually worked like that). By the way, the number of credit unions also declined ~4%.

We are seeing changes in customer behavior across all delivery channels, as we slowly migrate to digital. The industry, especially the pundits, all seem to be in a hurry to blow through online and straight to mobile. That fact remains that there are many tasks that are just easier to do in person or on larger screens.

Our research shows that segments are actually fracturing into new sub-segments. This is in contrast to remaining in monolithic silos. Older millennials act far different than younger versions of the same group, and affluent older millennials are different still.

We have tested consumer demand for multiple branch formats. We need to change the branch layout, capabilities and staffing. Continuing branch office availability is a smart choice, for at least another generation. We need better deployment of technology, better training for branch personnel and targeted strategies for moving consumers to more efficient services. Getting rid of services before perfecting newer ones is not a recipe for success.

The fact is that we have to deal with different segments that all have different wants and needs. If we want to keep all of them, we need to stage services and channels to meet those specific needs. This is a game of 3-D chess, not checkers, and we can choose not to play. Billions of investment dollars continue to pour into Fintech start-ups and they are more than happy to help any segment we don’t want.


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