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Only Digital Koolaid Drinkers Believe Branches Are Already Dead

It seems there are two types of people in banking today: those who believe financial institutions should abandon branches entirely, and those who believe the data.

Rationally, it doesn’t make sense… People aren’t using branches anymore. They don’t really need them to conduct basic transactions. Footfall is way down. Nearly everything can be done through digital channels. This sense of logic has lulled many in the banking industry into believing branches are dead.

But study after study has proven time and time again that this simply isn’t the case. Despite declining usage, the presence of branches is key to acquiring new customers. Convenience of branch locations is still far and away the number one reason customers cite for why they chose their bank.

In a recent study by CFI Group, the number one reason consumers cite for choosing their current banking provider: convenient branch location.


When asked how important it is to have a branch nearby, 64% said it was either important or very important. Only 10% of bank customers told us the branch location was of little or no importance. 68% of respondents said they live less than three miles from the nearest branch. This is true for both new and long-time customers.

“Banks must recognize the continuing importance of having a strong, well-run branch presence,” says Sheri Petras, CEO of CFI. “Consumers still choose their banks primarily based on the proximity of the branch locations.”


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A third of bank customers surveyed said that they were already using their bank branches either somewhat less often or significantly less often than they were three years ago. Only 17% admitted to using the branches more often and 52% said their usage was about the same.

Only 37% say they are going into a branch more than once a month according to the CFI survey. Nearly a third (31%) say they are using the branch less often than just three years ago, compared to only 17% who use it more.

“Though customers may not visit the brick-and-mortar locations as much as they previously did due to the rise of web-based banking, the experience they have when they do visit is crucial to ensuring satisfaction and loyalty.”

When asked about the future, most customers (60 percent) did not expect their branch usage to increase, while 25 percent expected it to decrease. Only 15 percent of respondents reported that they expect to visit their bank branches more often in the future.

When asked to list banking activities that they perform remotely now as opposed to just three years ago, 70% of customers indicated at least one activity type. Checking account balances remotely was the most commonly listed activity, followed by paying bills and transferring money between accounts.


In CFI’s study, 86% of respondents ages 18-49 said they now do at least half of their banking remotely compared to 76% of those ages 50 and older.

Even though consumers are increasingly embracing online offerings, the fact that the bank offers these products and services does not yet appear to be a reason for people to begin doing business with a particular institution. According to CFI’s study, only 3% of respondents said they chose their bank based specifically on its website or mobile app.

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  1. Ron Shevlin says:

    “Convenience of branch locations is still far and away the number one reason customers cite for why they chose their bank.”

    Yes, but only a minority–35%–of consumers cited convenience of branch locations.

    The contention that branch convenience is the “number one reason” is misguided. It’s the MOST FREQUENTLY mentioned reason–but that DOES NOT mean that in all, or even many, decisions it was the most important decision.

    I explained this in a post right here on The Financial Brand called License to Statisticize:


    Scroll down halfway through the article and find the section that starts with this sentence:

    “Here’s another abuse of statistics, a much more subtle one.”

    …and you’ll why the statistics regarding branch location as a decision factor is little more than quantipulation.

    p.s. For the record, I am NOT in the “branches are dead” camp.

  2. Who’s saying anything about branches being the “most important” aspect of the consumer decision? Ron, it sounds like you’re the one reading more into this than the article or study says.

    The only point this article is trying to make is that those people who say branches are dead ignore the fact that consumers continue to say they are of some importance. Ron, if you want to argue the degree of importance, go ahead. In fact, why don’t you write another article?

  3. I too am in the “branches are not dead” camp but they must evolve or be downsized so more of an emphasis can be put on the digital/mobile business model.

    That’s because I believe it is in the digital/mobile channel is where future sales will happen b/c transactional branch traffic will continue to drop. In the past, it was these transactional interactions that allowed a bank/CU to build a relationship with customers and cross-sell products/services.

    But that won’t be the case in the coming years as the survey noted 86% of respondents ages 18-49 said they now do at least half of their banking remotely.

    I believe what will hamper growth is banks and credit unions are not prepared to attract and acquire digital leads for loans and new accounts.

  4. The argument always seems to be binary. Branches are dead or they are not.

    The branch network strategy of last century is dead. So is the banking strategy of the last century. Too much time has gone by of people in financial services doing nothing. The smart bankers are embracing change. Some have changed their business models from retail focus to commercial focus. Others are buying banks. Even others are doing both. Some holding companies built online banks while others decided to build mobile first banking solutions. Some banks have partnered with FinTech startups to providing banking services.

    James Robert Lay has shared some very dire facts. What is great about FinTech is banks and credit unions do not necessarily have to solve these problems. FinTech startups are doing it for them. Look at the very good mobile banking platforms that were build by Malauzai Software and Banno (Banno is now owned by core Banking Provider Jack Hanry & Associates). Loans can be easily acquired via awesome FinTech tools like the one from CUneXus Solutions.

    There is enough tech today to allow any bank or credit union be a decent service provider in today’s digital and mobile world. Banks and credit unions knew these changes were coming for a long time. Internet Banking in the US started in the mid 1990’s. Brett King published Bank 2.0 in 2010. The data and trends outlined in his book were born in the years prior.

    Part of the problem is the research and those interpreting it. We ask consumers opinion. Banks should be measuring their customers actual behavior. Many banks still do not allow customers to open an account via the mobile banking app. Most online account opening as deployed by banks is not user friendly nor optimized. That leaves the branch as an important place to open accounts. The best deposit account opening experience I have experienced to date is BankMobile’s and it was all done via an app. There is more than one company creating technology to make mobile account opening easy. Mitek drives some of it. Avoka was been demoing theirs at several Finovates. The research quoted and what I have read looks at aggregate data. That leads to misleading interpretations of the data.

    Is there research that compares users of banks who have optimized full service mobile/online services (you can do everything via mobile and online from opening accounts to managing your banking) vs those that do not? If it exists, I have not seen it.


  5. To answer your question, David…I have never seen research that addresses what you ask about. However, Aite Group may be working on something that does. They had just fielded a survey that addresses your questions when I left the firm. I don’t know where they are in getting something published.

  6. For “convenient location” – does the survey distinguish between ABMs (a must for all people at some time) vs. branches? Personally, all I care about is access to cash when I need it, and I know other Millennials fall in the same camp. I think it’s an important distinction.

  7. Banks can sell far better at branches. For that reason alone, branches won’t be dead for a long time to come. http://gtm360.com/blog/2015/02/13/secret-of-survival-of-bank-branches/.

  8. Those that like to say “branches are dead” do so more for shock value than anything else. Branches are not dead: they are just changing.

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