Digital Banking Summit | June 2-4, 2014 | Los Angeles

Are Branches Doomed By Mobile Banking?

Most consumers can imagine they’ll bank 100% digitally in the future, even those who love traditional banking, branches and check writing.

By Rob Rubin, Managing Director, Novantas

Many banks and credit unions are winding down branch network size and downsizing existing branches while expanding digital service channels to support customers. This makes sense: Nearly three-quarters of bank shoppers believe they’ll do all their banking virtually in the future. The paradox is that branches are still very important for new customer acquisition. Today, many consumers choose the institution with the most convenient branch locations and many will go into branches to open accounts. But after that, most will visit branches very infrequently, if ever.

According to data from FindABetterBank, consumers who are specifically interested in mobile banking services are very likely to believe they’ll bank 100% virtually in the future. While fewer banking “traditionalists”  (those using checks, for instance) see an all-digital future, it’s still a healthy percentage — nearly two-thirds.


One’s interest in specific features also correlates with age. Younger shoppers are more likely to be interested in features like mobile banking and older shoppers are more likely to be looking for traditional checking account features like free check printing.

When you tie all this together, there’s a strong connection between the way banks and credit unions market their brand, their products and their branch network strategy. If your financial institution’s products attract the growing segment of mobile-centric consumers, then you’ll be able to accelerate the branch wind-down process. But if your strength still see your greatest success among baby boomers (a shrinking segment), you may need to keep those branches open a little longer.

Insights from Rob RubinRob Rubin is Managing Director of Novantas Data Services. His research leverages insights captured from thousands of bank shoppers every day while they are actually thinking about- and in the process of shopping for a new bank.

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CUNA | Youth Week 2014


  1. Yet, as reported earlier in this same forum, “those who have added branches in the last five years significantly outperformed those who didn’t, and along every metric that matters.” (Performance Data study)

    I’ve found that research needs to be taken with a grain of salt these days. You need to look at the source, or sponsor, of the study. The studies that indicate branch growth will continue seem to be sponsored by architectural firms who build bank branches. While the companies that think branch growth will decline supply mobile banking services.

    It’s like the studies that say cell phones pose no health problems, but are funded by the cellular telephone industry. Or the studies that say direct mail is dead, but are paid for by social media companies.

    I read it online, so it must be true…right?

  2. Bob, while the contradictions you point out are fair, your criticisms of these two points of research are not. The earlier study did come from a firm that builds branches, but it’s pretty difficult to manipulate or skew the study they conducted with any particular bias. Their study looked at *all* 6,700± credit unions in the U.S. — not a selective sample. In that study, the methodology negates bias; the data is what it is… objective, comprehensive. That study simply found that there was a higher correlation for growth among CUs adding branches, and a similarly high correlation for contraction (of assets, loans, deposits and ROA) among CUs that didn’t add branches. Is there a cause-and-effect relationship between the two? No, not necessarily. Correlation(s) and causation are not the same thing.

    This study in question here is from a research firm. Novantas/Novarica is widely regarded as one of the most reliable, credible sources of research in the financial industry. They run their website as a consumer research tool. They have no obvious bias, no skin in the branch game, so there is no reason to treat their data with suspicion. They are drawing from a statistically valid pool of at least 1,000 people respondents, and quite often 2,000+.

    Is there bias in research? Usually, yes.
    Should all research be scrutinized? Yes.
    Can data be manipulated? Yes.
    Does The Financial Brand try to avoid “bad” studies? Always.

    Our job here is to share data and information that we think has merit. We don’t publish findings from research studies that seem in any way circumspect. It’s not like we publish everything that crosses our desk. We look closely at the questions, methodology, sample size and publisher/author before making any decisions.

    We share what we think is reliable data, but we aren’t telling people how to think. It’s up to readers to decide how to best utilize (or disregard) any research we share.


    Jeffry Pilcher, Publisher
    The Financial Brand

  3. Jeffry, to be clear, I have no issues with The Financial Brand. I find most of what you publish to be of interest and insightful. I am also confident that The Financial Brand does an excellent job of separating the wheat from the chaff.

    I strive to get accurate information to guide my consultations with my financial services clients. As you indicated, there is bias in research, and I was only attempting to point out that two recent studies appeared to come up with different conclusions.

    I was also pointing out the unfortunate trend these days where industries and companies refer to “reasearch” to make one’s point. I cited some examples above (the cellular telephone industry), and could easily cite many more. There is no question in my mind that data is frequently being manipulated to make a point. You only have to watch a half hour of MSNBC followed by a half hour of FOX News to see what I mean.

    My message is simple…caveat emptor. Let the buyer beware.

  4. Bob, there’s one huge point most studies about the future of branching tend to ignore: the difference between transactional and advisory services. People tend to view branches as this homogenous building that does “banking.” In reality, there are two completely different activities occurring in branches. There are monetary transactions — teller-based activities — and sales/service activities. Very few studies on branching treat these as two separate considerations. Most research only looks at the transactional component.

    Is online/mobile killing the *transactional* side of branches? Yes, it would appear so. But does that lead to the conclusion (that oh so many have drawn) that “Branches Are Dead?” No, it doesn’t. There is still a huge desire — among all age groups — to conduct sales and service activities in person, in a branch environment. For complex, high value services like home loans, consumers continue to choose branches. When people have problems they need resolved, sometimes it’s easier or more convenient to deal with them in person.

    Researchers who run around asking consumers questions like “When’s the last time you stepped foot in a branch?” and then conclude “Branches are irrelevant” probably have a significant built-in bias.

  5. Relative to survey bias, I can field two different surveys that prove Americans either support or detest abortion. If I work for MSNBC, I run this question:

    “Do you support a woman’s right to make all medical decisions concerning her health and well-being?”

    If I work for FOX News, I run this question:

    “Do you believe that every human being is entitled to live a full and fruitful life?”

    I can get 75% of respondents to agree with either question. And then I can spin my “survey” results to suit my political agenda.

  6. Our view at High Definition People® is it’s not a matter of mobile versus branches. We feel financial institutions should stop relying on “flavor of the month” sales and focus on building relationships that generate revenue over the long term and transcend whether or not customers or members visit the branches (see our blog post Declining Branch Traffic – Armageddon or Opportunity? ).

    As Jay Kassing points out in his excellent publication, Marketing Execution, “right this minute, your existing clients have 3 to 5 times the number and dollar of loans with your competitors than they have with you”. Build the relationship and your clients likely won’t be going down the street to your competitor when they need a loan, financial planning, etc.

    While mobile usage is growing, maintaining a personal connection through proactive outreach, onboarding follow up and providing value-added financial education is becoming essential to building the relationship.

  7. On the role of branches going forward, I recently read an article by the CEO of BBVA where he says:

    Technology has already transformed many industries. Next in line is banking. In two or three years, only 5 per cent of consumer interaction will be through branches. The rules have changed and a new league of competitors is emerging.

    If bank CEO’s are convinced branches are dead then surely it is only a matter of time before they adjust their real estate assets accordingly and make the prediction a reality.

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