The emergence of electronic channels in the financial sector has led some commentators to predict the imminent demise of the branch channel. In a previous blog, EMI disputed this prediction, arguing that banks would maintain a significant physical presence, although there would be changes in branch activities.
U.S. banks’ ongoing commitment to their branch networks is seen in the latest quarterly financials. Data is available for 8 of the top 10 branch networks in the U.S. (the exceptions are Wells Fargo and TD Bank).
- These eight banks combined operated 23,152 branches in 1Q11, a decline of just 27 from 1Q10, and 7 from 4Q10.
- Two of these banks (Chase and U.S. Bank) grew their branch networks in the most recent quarter. And in April, Chase reported that it would open 100 branches in California and 37 branches in Florida in 2011.
- Bank of America registered the largest decline, with a decline of 51 branches between 4Q10 and 1Q11. Even after this decrease, it has more than 5,800 branches.
So, banks appeared committed to their branch networks for the foreseeable future. Electronic channels are now very effective in handling everyday service transactions, and are increasingly important sales channels. However, branches are still required for more complex and sensitive sales and service transactions, as well as for providing advice. However, banks need to continue to invest in their branches (in both physical infrastructure and personnel) in order to optimize effectiveness.Subscribe