The reports of my death have been greatly exaggerated. — Mark Twain
This famous quip is very true of brick-and-mortar bank branches. Research shows that traditional branches are not disappearing as fast as many predicted.
The number of branches nationwide has fallen from a peak of 99,550 in 2009 to 92,997 in 2015. This decrease of 6.6% primarily results from a diminishing number of financial institutions due to bank consolidation. In the last 20 years, the number of commercial banks and savings institutions operating in the U.S. has decreased by nearly 50%. This precipitous drop in banks correlates to a relatively modest drop in the number of branches.
In fact, a recent survey conducted by Bankrate found that 45% of Americans visited a branch for personal business within the past 30 days. Most surprising is that usage of branches cuts fairly evenly across all demographic lines, with 40% of millennials having visited a branch in the past month. The research showed that the most significant factor impacting traditional branch visits was income. Respondents with higher incomes had greater banking needs and visited branches more often.
Why Visit a Branch?
Consumers desire human interaction when addressing a problem or discussing more complex banking needs. Visiting a branch may be the most inconvenient way to deposit funds, but it remains the preferred method for 35% of Americans. An Accenture survey showed 87% of consumers plan to use branches well into the future and want human interaction when they go there. To top that off, branches remain the overwhelmingly predominate method to open new accounts, with 77% of new checking account openings occurring within a physical branch.
Branch Tellers are Disappearing, Not the Branch
Branches will need to adapt to provide the services that consumers seek when making the decision to come in. Consumers are increasingly using online and mobile options for checking balances and paying bills. They are very comfortable using an ATM to make withdrawals and to deposit checks. Consumers want in-person service with a banking professional for more complex financial products and services and to resolve banking issues. This means fewer teller windows and more offices where professionals can have more meaningful conversations regarding clients’ banking needs.
There are many reasons for the continued necessity of branches, including concerns over internet security, simplicity of use and a lack of knowledge surrounding the capabilities of online and mobile banking. However, the most powerful force that will keep physical branches alive and well for many years to come is the instinctual human desire to meet the people they are entrusting with their money. There is no technological substitute for the trust building that occurs when you can meet with someone face to face and shake his or her hand.