NEW YORK–A new report from PwC is projecting a 20% decline in the number of branches owned by the biggest banks by the year 2020, primarily as the result of growing use of digital services.
The study notes closing bank branches is an attractive option to manage cost pressures: the traditional branch costs roughly $2 million, $4 million to set up and $200,000-400,000 per year to operate. “However, banks are finding a middle-ground which enables them to preserve in-person services on a sustainable model,” according to the analysis.
“Although there is a rise in online banking, with fewer customers opting to go to branches, banks need to be strategic in the way they accommodate customers,” said Bhupender Singh, CEO of Intelenet Global Services. “Not all customers want to go solely online for the handling of such sensitive information. This is where banks can look to be really distinctive in the way they harness technology to direct financial advisers to customers’ doorsteps. Banks currently have the advantage of an established customer base. It is the in-person expertise that continues to set banks apart from their newer fintech competitors, enabling them to remain distinctive.”
Singh added that the value of relationship-building which comes from providing in-person service shouldn’t be underestimated.
“The future of banks as a whole comes down to the trends in customer demand which must be the driving force behind business strategies and technology adoption,” Singh said. “Developments in mobile technology are driving customers to interact with banks in numerous ways, which means the need to integrate an omni-channel strategy that accommodates all customers is ever-increasing. Banks should offer a blend of online and in-person banking that complements traditional services.”