Is there a trend towards fewer but fancier bank branches? An article in today’s American Banker suggests that there is, at least among some institutions. The article, titled: The New Bank Branches: Fewer But Fancier, discusses the efforts of some regional and national banks as they take steps to reposition some of their branches – namely those in high-growth or more affluent markets – as places that are more conducive to conversations and relationship-building with customers. The decisions are driven, at least in part, by dwindling regular branch foot-traffic:
As walk-in traffic declines, experts say, making customers feel as welcome as possible is central to post-recession growth plans at certain banks. Consumer research indicates that people still want to go to the bank from time to time to open up a new checking or investment account. But they don’t need to wait in line to deposit Friday’s paycheck.
The article goes on to cite findings from a study conducted in July by consulting firm, Celent:
Bankers said that foot traffic is falling at branches and that they expect the trend to continue. Respondents said that branches will still be necessary in five years, but they anticipate that their footprint will need to be 10% smaller by 2015 and feature 20% to 30% fewer teller stations.
While “fancier” may not be the best word to describe these changes, the article draws attention to an important point: Rather than try to increase foot-traffic, which would be a lost cause in most cases, these institutions recognize and are adapting to changing consumer preferences and behaviors. They realize that consumers still need branches, but don’t necessarily need them as often or for the same reasons as they did in the past.
As consumer behaviors change, delivery networks should change as well. In many cases, the branch has been ignored as institutions have adopted and introduced new technologies like mobile banking, remote deposit capture and online banking. But remaining relevant requires that the branch network reflects these changes as well.