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Do bank branches matter?

By David McMillin · Bankrate.com
Saturday, May 26, 2012
Posted: 6 am ET

A new survey of retail banking customers around the country shows that more account holders are moving away from in-person interaction at physical branch locations. Here's a snapshot of the results from the study performed by Rosetta, an interactive marketing and consulting agency.

  • Fifty-two percent of respondents said their bank's website is their primary method of banking.
  • Thirty-two percent said the branch was still their primary method.
  • Twelve percent rely on the ATM without entering the branch.
  • Three percent prefer a bank's phone center.
  • One percent use mobile banking as their go-to source for money management.

The pace of consumer adoption of digital banking tools has rapidly accelerated over the past few years, so the fact that more consumers are turning to the Internet isn't surprising. However, these statistics did get me thinking about the future need for bank branches and its impact on the country's biggest banks.

The financial giants who hold the majority of retail deposit dollars have traditionally used their massive branch networks as a major selling point. With advertisements that promote the benefit of being able to travel anywhere and walk into a branch, big banks have grown simply by being everywhere. However, it's clear that being everywhere is no longer a necessity. Account holders are increasingly turning to their computer screens instead of tellers. As fewer customers enter those branches, they're going to become burdens on the institution's bottom line. More importantly, I expect that smart account holders will question whether having thousands of branches to choose from is worth battling rising bank fees.

Honestly, I'm surprised that more bank branches haven't already closed. According to statistics from the FDIC, the number of physical offices fell by just 0.3 percent last year, and the FDIC points to bank failures and accompanying branch consolidation as a primary reason for the decrease.

Obviously, many account holders still prefer going to an actual location, and I don't expect bank branches to become dinosaurs anytime soon. Instead, I think we'll start to see some of those big nationwide branch networks begin to shrink in size due to the combination of cost-cutting efforts and developments in online and mobile finance tools.

What do you think? Do you care whether your bank has a big branch network?

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