Credit: Shutterstock photoLately, the banking industry is increasingly witnessing restructuring measures with its services being more electronic-embedded. Many banks, including the BOK Financial Corporation ( BOKF ), have molded themselves to suit the changing realities.
On Nov 12, this Tulsa, OK-based Southwestern bank announced the discontinuation of its in-store grocery branch model, which will lead to the closure of 29 branches in first-quarter 2015. Rapidly changing client needs and a compulsion to embrace technology-oriented products might have triggered this bank to scrape its instore grocery branch model.
When the instore grocery branch model was introduced in the mid-1990s, the idea was to offer a convenient banking option for clients who visit grocery stores frequently. But thanks to increased usage of technology in the banking domain, the ground reality has seen a dramatic change. Now, a large customer base prefers mobile and online platforms, as well as deposit-friendly ATMs for routine banking transactions. Clients are now visiting branches occasionally for opening an account, taking out a loan or obtaining financial advice.
The 29 branches that will get the axe include 24 in Oklahoma, 3 in New Mexico and 2 in North Texas. Additionally, 10 in-store branches will be relocated in market places and these will not be closed until new locations are found. Around 75 employees will be relocated either to existing open positions or positions newly created. Severance packages and retention bonuses will be provided to the relocated employees.
BOK Financial expects to spend $5.0 million in fourth-quarter 2014 and $1.5 million in first-quarter 2015 in severance and other costs. However, this branch closure initiative will drive an annual cost savings of $7-$8 million.
BOK Financial currently carries a Zacks Rank #3 (Hold). Better-ranked Southwestern banks include BancFirst Corp. ( BANF ), Cullen/Frost Bankers, Inc. ( CFR ) and Texas Capital BancShares Inc. ( TCBI ). All these banks carry a Zacks Rank #2 (Buy).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
