For several years now, experts outside the banking industry have said that it’s only a matter of time before real-world branches become in many ways obsolete, as consumers’ preferences continue to shift online and onto mobile devices. However, while there has certainly been a recent trend toward reducing the number of branches in many parts of the country, the idea that they would be eliminated almost entirely seems silly.
Recent data suggests that only two of the 12 banks with the most physical branch locations in the U.S. aren’t yet reducing the number of these brick-and-mortar spaces, and experts believe that strategy will continue for at least a decade to come, according to a report from CNBC. However, it’s likewise important to note that there are many things consumers can do at branches that they cannot via a mobile device or online banking option, and as such branches are never going to be fully eliminated.
How widespread is this issue?
The fact of the matter is that while there has been a lot of talk about branches being shut down, data suggests that the trend is minimal, the report said. Federal data shows that there were 82,613 branches open across the country at the end of 2014, down from 82,860 the year prior. That’s a loss of 247 branches, or 0.3 percent of the total number. Likewise, that 2014 number was also down just 1.26 percent from the recent high of more than 83,600.
Certainly, then, it’s reasonable to suggest that this trend is a little overblown, even if banks are indeed reducing the number of branches they had, the report said. They closed an average of about 20 per major bank, let alone minor ones, nationwide. The numbers are a bit more significant over longer periods of time – they’ve dropped off 26 percent over the last decade, and as down 61 percent from the all-time high in 1994 – but it’s fair to say that things have more or less leveled off.
Banking customers need more than they used to, but branches are still key.The heart of the issue
Meanwhile, it might be wise for banks to invest in both making the online or mobile banking processes seamless and easy, while also still focusing on a good branch experience, the report said. That’s not to say that branches won’t continue to decline, or that the pace might not pick up again, but it certainly has a long way to go before the panic seen in recent years is justified.
“This modest decline (in branches) pales in comparison to the technological change in banking and payment processing and raises the question of whether or not banks are transforming their delivery systems fast enough to accommodate changing client needs,” the financial services firm Keefe, Bruyette & Woods recently wrote in a client note.
The more banks can do to make it easy to get in and out of a branch for important transactions that can’t be done online or via mobile phone, the better off they’re going to be when it comes to both attracting and retaining customers.