Branches are still important to consumers
The banking industry has undergone a massive amount of change since 2008. Fintechs are regularly facilitating new digital banking options and Millennials are eager to adopt the online and mobile banking innovations. But for many Americans, the services of banking still remain firmly rooted in its branches.
According to a 2015 Bankrate survey, 45 percent of Americans visited their bank branch at least once within 30 days for personal banking services. So what is it about branch banking that keeps customers coming back?
Despite the fact that many of the account and transactional services that branches once singularly provided have gone down the digital path, branch locations do remain an asset to individuals and merchants for many of their fundamental banking needs. The digital alternatives are unlikely to phase out basic branch operations such as cash deposits and loan negotiations, and in these important roles, branches still have a place in the communities that they serve.
In August 2016, Fortune reported that U.S. banks experienced an increase in industry assets while increasing branch consolidation. Since 2009, banks have been trimming back their branches by 6 percent, making the remaining number of nationwide branches the lowest in a decade, Fortune stated. However, as they reconfigure and reinvent themselves, it would be unwise for banks to completely eliminate their brick and mortar presence.
Although the potential for further digital integration surely exists, banks should remain dependent on physical branch locations – if not for primary services, then for one important factor: their customers’ trust. Through their branches, banks have the opportunity to reach consumers, promoting financial confidence and further investment in their customers’ financial well-being with additional and advantageous banking services.
In spite of the digital pervasiveness of internet banking and the features that accompany it (online checking, mobile check deposits, electronic funds transfers, and other desktop software integrations), physical locations have the advantage of a physical presence. It may seem old fashioned, but bank branches offer an experience that no computer or mobile device is able to provide.
When it comes to a warm sense of monetary security, there’s nothing better than the cold confidence of a bank vault. Knowing that birthday check from grandma has been safely passed into the hands of a real teller, who has then deposited the amount into your account right there in front of your eyes, well, no app has been able to duplicate it.
Not yet anyway.
But if you’re wondering if simple distrust of modern, digital banking technologies held by the elderly and slow adopters is the only thing keeping traditional branches afloat, that’s not quite the case. Despite half of participants over 65 saying they use their bank’s mobile app, a Market Force study reported by The Financial Brand found that 59 percent of all participants still bank with traditional retail banks. In contrast, only 3 percent used digital-only services without physical branch locations.
So although mobile adoption is currently at its height among 18 to 24-year-olds and is increasing across all generations, bank branches still appear to be a necessity among all customers.
Despite a slight decrease in demand, bank branches will continue to play a necessary role, so long as their services aren’t eclipsed by new digital innovations. Until then, branch banking will remain an important institution for customers, with online banking continuing to be viewed as a convenient addition to the services that they provide.