Digital technologies are changing everyday life. These technologies aren’t just changing the way people communicate, but are impacting the way they handle their finances, including how they use a physical bank branch. With digital technology making remote banking possible, is it necessary to keep bank branches open? The answer is yes and Financial Technology Today has explored why in the following articles.
Are Bank Branches Closing for Good?
Recently, banks such as JP Morgan, Wells Fargo, and Bank of America have been closing branches in low-income neighborhoods. Although the banks are receiving criticism from this decision, the numbers support these closures. According to the Federal Reserve’s Survey of Consumer Finances, older, wealthier consumers are more likely to use a bank branch.
It isn’t about how many branches a bank has, but the right branches. For physical locations to be successful in today’s digital world, branches must be in convenient, accessible areas and offer customers more than the traditional transaction.
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While a strong digital strategy is needed to keep banks relevant, financial institutions must also evolve their branches. An Aite Group study by Tiffani Montez suggests that bank branches can be reimagined to work as a vital part of customer engagement. Physical branches hold a value that digital tools don’t -customers can come speak with someone who can guide them, nurturing the customer relationship.
When banks close branches without considering the possibilities, they miss out on a valuable environment for their customers. Quality data “can help [financial institutions] determine whether to retain, relocate, or consolidate existing branch locations through tools that allow banking executives to analyze customer data and site characteristics that impact branch network performance,” said Montez.
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“Bank branches are a crucial part of financial access,” said Scott Astrada, a policy advocate at the Center for Responsible Lending. “The argument that we all live in this digital society, so we don’t need bank branches is completely false.”
While bank branches need to evolve, they must remain present to serve customers who may not be digitally inclined or need guidance on large decisions like loans. JP Morgan is taking this to heart and spending billions to open 400 branches that will extend its profile to new states and communities where customers are likely to use branches.
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