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February 28, 2020 Comments Off on Are Bank Branches Losing Relevance? Not Exactly Views: 475 National News

Are Bank Branches Losing Relevance? Not Exactly

Financial institutions are continuing to decommission bank branches at a record pace, along with opening new ones to better serve their customers, JLL reports. That’s creating vacant space which is being repurposed for fast-casual restaurants, health clinics and convenience-store retail, to cite three most common reuse scenarios.

However, it’s not as cut-and-dried as simply phasing out brick-and-mortar banking facilities. For one thing, consumers haven’t abandoned the idea of going to the bank to conduct their personal financial business, despite there being fewer branches.

“During this economic cycle, the FDIC reported that deposits have grown $5.2 trillion, an increase of 68% since 2009,” write JLL researchers Christian Beaudoin and Walter Bialas. “After accounting for the more than 13,000 branches shuttered since 2009, the average branch in the U.S. has seen its deposits almost double, to $148 million.”

And although the ideal branch is now smaller and more digitally focused, “this industry shift is taking place incrementally due to the large number of existing branches across all markets,” according to the report.

Additionally, Beaudoin and Bialas note, while the shift toward a digital-only customer experience is gaining steam, “it is not complete—at least not yet. For example, the Financial Brand recently reported that 90% of consumers are comfortable with fintech options for real-time payments and a variety of mobile wallets. On the other hand, they also reported that 93% of consumers only ‘trust’ big banks, community banks and credit unions with their financial data. As such, it is not clear who will be the winners in this competition for the consumer.”

At this juncture, traditional banks are being “challenged on several fronts to maintain their customer base,” the report says. “They must optimize branch availability to meet the physical need for convenience. They need digital solutions for banking anywhere and anytime, and they need user-friendly apps to make on-the-go transactions easy and seamless.”

Simultaneously, banks must maintain a level of personal engagement in order to answer any financial questions clients may have. “It is not easy to excel at every stage of this customer journey, but traditional banks are still at the forefront and working to address these challenges,” write Beaudoin and Bialas.

Read more at JLL

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