Fully Automated Banking Branches: A Revolution in the Making?

A pen notebook and a calculator Credit: Shutterstock photo

Is branch banking model on the brink of a revolutionary change? Given some initiatives the banking giants are undertaking, it certainly seems so.

Over the past one month, Bank of America Corporation BAC opened three fully automated branches on a pilot basis. These branches, located in Denver, Colorado and Minneapolis, feature ATMs and video conferencing facility allowing customers to communicate with off-site bankers.

While these branches will have on-site bankers in case customer needs any assistance, the ultimate aim is to do away with employees. These branches are smaller in size and utilize advance technology, with a goal to sell mortgages, auto loans and credit cards.

Though it needs to be seen how successful this initiative will be, it is definitely going to revolutionize branch banking concept.

Over the years, banks have been trying to digitize operations. With increasing number of customers using off-site method (mobiles and desktops) to fulfill their banking needs, this concept is a step in the right direction.

If we look at last year's figures for big banks, BofA had 21.6 million active mobile banking users, an increase of 16% year over year. Moreover, the bank's nearly 19% deposit transactions were done through mobiles. For JPMorgan Chase & Co. JPM , active mobile users were up 16% to 26.5 million, making the company the largest active mobile customer holder among major banks.

Wells Fargo & Company WFC had 27.4 million digital (online and mobile) active customers, including 19.6 million mobile active users. Citigroup Inc. C also had decent digital customers last year, but the data is not available.

So, if these figures are any indication, digitization is on the rise.

At the time when banks are taking measures to control expenses and improve efficiency, these efforts are helpful for them. Also, banks are closing down less profitable branches and at times consolidating these to better utilize resources.

Dean Athanasia, co-head of Consumer Banking division at BofA, recently at an investor conference said, "We want to streamline the transactions from front to back office - make it completely seamless - and that goes to auto loans, mortgage, credit cards, deposits."

Similar views had been echoed by top management of other banks over the last few years. While banks are taking steps toward self-service branches with an aim to manage costs, they are increasingly investing in cybersecurity and other technology to better serve their customers.

Of the above-mentioned banks, BofA and JPMorgan carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

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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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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