Bank branches decrease as industry evolves with technology

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May 16, 2017

bank branchesBanking is no longer about which brand has the most locations. Today, it’s about how effectively a bank delivers services to its customers and their need for remote, anytime, anywhere access for their transactions.

As a result, the FDIC estimates today, on a net basis, there are almost 7,700 fewer branches in the U.S. than in 2007. This represents a decline of close to 8 percent in the number of bank locations nationwide.

The decline is widespread and even high-growth areas in Florida, Texas and the West have seen a reduction in bank branches. In Houston, the number of bank branches decreased by 4.9 percent from 2010 to 2016.

But this does not mean the branch bank is disappearing. Branch openings are still taking place, albeit on a selective basis and predominantly freestanding properties in traditional suburbs.

Since the recession, deposits have steadily increased indicating banks have been doing more with less.

Looking forward, branch numbers and square feet will continue to decline, even in growth markets, as banks find more effective ways to meet customer expectations, leverage technology and manage costs.

As the result of technological advances and evolving real estate strategies, here are five changes on the horizon for branch banks:

  1. The number of branch locations will continue to shrink, as banks optimize market needs.
  2. Mobile apps and financial technology will further streamline banking, changing how customers use branches.
  3. Smaller branch sizes will reduce real estate costs for banks as they refocus to meet changing consumer behavior.
  4. Banks will tailor branches to meet customer needs and demographics – from a handful of full-scale operations to much smaller locations for basic transactions.
  5. As public acceptance gains traction, expect to see greater use of automated branches.

For more on how the banking industry is changing download the 2017 U.S. Banking Outlook.

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