Going, going, almost gone?
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While brick-and-mortar branches have been the norm for financial institutions for decades, the amount of them nationwide appears to be changing quickly. The continued evolution of how consumers partake in relationships with their financial institutions may not only increase the need for executives to make important, well-informed bank decisions, but more specifically, branch level decisions, as well.
One of the main reasons for the lowered activity at branches, and thus, the closing of several locations across the U.S., is due to more customers opting to use technology to get their financial information. This includes computers, tablets and mobile phones.
According to Bank Technology News, the trend may not have to do with the difficult economic situation the country continues to deal with, but rather due to brick-and-mortar branches becoming dated and needless in many areas of the nation. Some branches attempted to adjust by taking the technological route and improving the overall ATM experience. This, combined with improved technological advancements at teller windows, also helped improve the situation for branches, as they use fewer people and stay in business.
"There's a tipping point as a result of the regulatory and broader economic issues of the past few years that have banks rethinking the cost and effectiveness of maintaining branches," Bob Meara, senior analyst at Celent, told the news source.
Branch levels are in decline
When looking state-by-state, some areas were affected more significantly than others. Citing a report from SNL Financial, the Reading Eagle noted the level of bank branches dropped 1 percent across the nation during the summer. However, only Rhode Island, California, Delaware and New Mexico experienced heightened levels of new branches. Of the 46 states that had declines in net branches, Pennsylvania had the worst figure, as it experienced more than 80 that closed their doors.
"I personally see it as a trend," Robert Kafafian, president and CEO of the Kafafian Group, told the Reading Eagle. "The number of transactions that occur in branches has declined 42 percent since 1992. Branches are becoming consultative (centers) rather than banking centers."
With more consumers looking toward online options for their account information, banks may not only need to make sure that these methods are readily available, but also that they are secure. Keeping financial websites secure will not only help keep customers comfortable with them, but they may have a better chance of staying with their current financial institution.
Do you see it as a trend? If so, what is your financial institution doing to adjust to the rapidly changing banking structure?