Are traditional bank branches about to become an endangered
As self-serve options for banking become more popular and
convenient, some of the nation's biggest banks are planning branch
overhauls that could offer a vastly different banking experience --
one in which automated interfaces may replace most human tellers.
The changes come as consumers move increasingly toward banking
habits that favor online transactions and other automated
Big changes for some branches
The move to leaner, less expensive branches for brick-and-mortar
banks could be seen as a move to compete with direct banks, which
are growing in popularity. According to a study conducted by
consultancy group TNS, of the four main types of banking
only direct banks grew their market share in
. Direct banks, which skip branches to offer online-only accounts,
grew at a rate more than three times the industry average from 2007
But direct banks still occupy a relatively small portion of the
market, accounting for 8 percent of new primary banking
relationships in 2012. So it's up for debate how much big banks see
them as a threat. Nonetheless, some major institutions are
re-thinking their branch models to offer an experience that relies
more on automation:
A 2012 study by research and advisory firm Celent found most
North American financial institutions are planning branch changes.
Nearly two-thirds of institutions said they are likely to redesign
branch layouts to support a sales/service model. Fifty-seven
percent reported they are likely to invest in ultra-low-cost branch
designs to replace or supplement their current branch network.
New branches combine convenience with human touch
A separate Celent report found banks could save $20,000-$30,000
per branch by implementing workforce optimization solutions that
make them run more efficiently and effectively. Savings like these
are likely the primary motivation for most banks reconsidering
their branch models.
But these changes may also be aimed at helping brick-and-mortar
banks address one of the perceived shortfalls of online banks. The
TNS study found some consumers are wary of using a bank in which
there is no possibility of in-person interactions. The new branch
models being considered are designed to offer convenience -- one of
the biggest benefits of online banking -- while still providing
some personalized service.
Still, recent MoneyRates.com research indicates that online
banks tend to offer the best interest rates on savings accounts and
lower fees on checking accounts. So it remains to be seen whether
innovative brick-and-mortar branches will be enough to slow the
growth of online banks.