Everyone seems to be talking about virtual and mobile banking. More banks and credit unions are looking to attract customers with virtual services that remove the need to ever visit a branch. At the same time, banks are closing more branches than they are opening. According to a report today from CNN Money:
U.S. banks closed 2,267 branches in 2012 while opening only 1,149, SNL Financial estimated – a net loss of 1,118 branches nationwide. It was the highest number of closures since the firm began keeping records of them in 2005.
However, it seems that demand for convenience and having a bank branch in your neighborhood is still an important criteria for consumers who are seeking banking services. According to a recent study by Novarica and FindABetterBank.com, having local branches available is important to consumers seeking a new banking relationship, no matter what their age:
The prevailing belief among financial marketers today is that younger consumers don’t care about bank branches while older consumers prefer branch banking. But Novarica cautions that sweeping generalizations like these can be misleading. Novarica found a surprising 58% of those under 30 would not consider opening an account at a bank without a branch nearby. And conversely, 64% of those 50 or older say they can imagine a time when they will do all their banking virtually.
The location of branch banks and ATMs close to home and work is an important consideration for 71% of those surveyed, and 50% said they had banking transactions that could not be completed at an ATM or online. Very few of those surveyed, 29%, said that they considered visiting their branch bank “onerous.”
In fact, younger depositors seem to be among those most worried about the number of ATM locations. Overall, 11% of respondents said ATM and branch locations were the most important factor. In fact, 58% said they would rather visit a teller to make deposits.
Clearly consumers still want to see their friendly neighborhood banker, especially to open new accounts and deal with unusual financial problems. While transactions such as withdrawals, transfers, and balance queries are moving outside the branch bank, many consumers still want a storefront bank to transact their business.
So what’s the solution for banks looking to remain competitive? How can banks maintain a competitive edge and still cut back on overhead from local branches? Perhaps its more streamlined branches with fewer staff and more targeted services. Banks also will have to do a better job at nurturing customers with integrated banking services, so whether they are using an ATM, doing online banking, or visiting their local branch, customers can be assured that there is a professional available to help them and offer service. Another way of thinking about it is going beyond virtual banking to offer virtual branch banking.
What do you see as the future for branch banking? Please offer your insights – we’d love to hear from you.