The Growth of the…Branch?

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The American Bankers Association just released survey results that say that the number of Americans that prefer to bank within a branch actually grew within the last year. Americans opting for internet banking fell by 8 percentage points, while the number who prefer to meet their banking needs through ATM or mobile each grew slightly.  The ABA theorizes that recent technological advancements made within bank branches have made the channel more efficient and therefore, more attractive to customers.

Reflecting the view across the pond, Accenture released a study last month, focusing on the UK financial services industry, with similar findings–online banking remains steady, while the use of branch and mobile channels grow.

There are certainly branch success stories for community banks in the U.S., and most of these involve a transition to self-service, whether through the use of image-enabled ATMs or video tellers. Kennebec Savings Bank uses image-enabled ATMs to handle one-third of the bank’s deposits, and the machines allow the bank to expand in its market through self-service branches more cheaply  than through a traditional branch. And Conestoga Bank opens two-to-three times more accounts each quarter through video tellers. (For more on how these banks are using technology in the branch, please read my contribution to Bank Director magazine’s innovation section, “Will Video Kill the Teller Line?“.)

But there’s one thing to remember: Relying on the branch as your sole access point won’t cut it. Actions, as they say, speak louder than words: Boston-based research firm Celent expects branch traffic to decline by as much as 5 percent annually. And even more to the point–no one relies on just one channel anymore. Data from Gallup published earlier this year underscores this point:

Branch usage and online banking usage within the last six months is almost equal; it’s when you look at frequency that online banking really outstrips the branch. When I spoke with Kevin Travis, managing director at New York-based advisory firm Novantas, last May about innovation in branch banking, he said that roughly two-thirds of customers are opening accounts in a branch–but they’re shopping online first. Omnichannel banking is getting a lot of buzz, but the theory is sound. It’s no longer branch strategy vs. mobile strategy vs. online strategy. Customers use different channels for different needs, so these channels should all work and function  together, and you’ve got to continue to innovate in all three.

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