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  1. It seems doubling-down on physical branches is the response community banks have faced with an increasingly digital customer. It reminds me of Blockbuster continuing to expand into more stores when Napster began to get attention.

  2. Jim Marous Jim Marous says:

    The entire concept of reallocating resources came from a community banker last week who discussed how much he could do with the funds being plowed into more branches. He said that it was frustrating that the goal was to serve new markets in areas where younger people lived. It was so funny, it hurt.

  3. Ron Shevlin says:

    Today’s community bank and credit union senior execs cannot be convinced that there is another path to growth other than opening branches. They don’t believe that there’s another way, and they’re not open to considering alternatives.

    The banks and credit unions that get to the channel shift first will be those in which the old guard retires first.

  4. I have always found it odd, like Blockbuster as Alex mentioned, that FIs can, and still are, investing $2 million into building a branch but then we found the following in our 2015 State of Digital Marketing Report:

    Only 1/3 of FIs have a website that is less than 2 years old.
    Only 17% of FIs have documented and mapped out digital consumer journeys
    Only 16% of FIs have invested more than $50K into build a new website
    Only 15% of Fis use a marketing automation platform
    Only 9% have the proper digital marketing budgets

    Yet…. we have also found:

    – Heads of retail banking estimate a 30% decline in branch sales from 2012 to 2017. (Digital Banking Report)

    – 88% of millennials want to avoid visiting a branch. (Chimecard)

    – 71% of financial shoppers use search at least twice to help in their decisions. (Google ZMOT)

    – 50% of consumers report searching exclusively online for financial services products. (Filene)

    – Mobile searches for financial terms related to mortgage, credit cards, etc. are growing 48% YoY. (Google Data)

    – 14% of all mobile searches are financial services related. (Microsoft)

    – 40% – 60% of financial services search terms are from a mobile device. (CU Grow)

    – Most prospective customers in the branch have also shopped online. (Filene)

    It is almost madness when you step out of the picture and objectively look at trends in changing consumer behavior.

  5. In Australia, we see a different angle whereby millennials wanting to engage a branch are still high at approx 40%. That need however is dominated by lending / longer term financial goal conversations.

    Whilst transactional banking is in heavy decline, the role of our branches as advisory and conversational hubs for millennials in terms of guiding them in lending needs remains strong.

    That said, we are equal in our branch expenditure and aggressive investment in digital sales capability.

  6. Great article Jim!

    Part of the issue that Part of the issue that we see is about the likelihood of ROI. Many financial institutions still do not (1) understand how to develop ROI modals/forecasts for digital investments, (2) do not track branches with individual P&L that can be compared against digital channels, (3) do not accurately track the ROI of past/current digital investments.

    Because of these issues that banks and credit unions often look at an investment in physical branches as a safer investment with guaranteed foot traffic verses digital investments. While a financial institution that does not track these channels sufficiently could invest heavily in digital and see no perceived value ROI, they are very likely to be able to invest in a physical branch and see new accounts walk in the door each day.

    Of course, financial institutions that invest intelligently and track their digital ROI find that the digital channel has a cheaper cost of customer acquisition, a higher level of custom satisfaction, and is more effective at growing wallet share than physical branches.

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