Lose Your Bank Branch? Blame Mobile, Online Growth

Dan McGaw rarely sets foot in a bank branch, but he may be more in sync with his accounts than his grandparents ever were.

Armed with remote deposit and online bill-paying, the 29-year-old Orlando, Fla., entrepreneur sees little need for the teller line.

“I only go to the bank when I need to take out cash, which is almost never,” he said. “I don’t have a checkbook; I use mobile apps or websites for more than 90 percent of my banking.”

As the popularity of mobile and online banking grows, more bank branches are starting to vanish.

Nationally, banks have closed a net 3,209 branches, or 3.2 percent, since 2009, according to the Federal Deposit Insurance Corp., which regulates banks.

Although bank failures, mergers and cost-cutting consolidation account for some of the vanishing branches, experts say it is clear that banks also are responding to a broader shift away from bricks and mortar. So as technology improves, the need for branches declines, they say.

“Banks are doing just about everything they can to push bank customers in that direction,” said Stanley D. Smith, a banking specialist and finance professor at the University of Central Florida. “They are looking at the generational changes and the rate of technology adoption, and they are closely monitoring traffic in their branches to determine where it makes sense to pare back.”

The banks also know it is not just younger customers who are spending less time in the bank lobby and more time banking with technology, Smith said. The biggest “game-changer” has been smartphone-enabled deposits made by taking a picture of the check and emailing it, he said.

“That is going to grow exponentially in the next year or so,” he said. “And though I agree that younger people are going to adopt these things at a faster pace, I think the older people won’t be that far behind them.”

According to a recent survey by Market Rates Insight, a California-based research firm, nearly 70 percent of Generation Y customers ages 18 to 35, and 65 percent of baby boomers ages 47 to 66, call online banking their “preferred channel” of banking.

Bankers acknowledge that such figures suggest the handwriting is on the wall, at least for the industry’s traditional strategy of building more branches. But don’t look for the old-school approach to disappear completely, they say.

“We think the reality is most customers still want the best of both worlds,” said Mike Sleaford, president of Tavares, Fla.-based Reunion Bank of Florida and a board member of the Florida Bankers Association. “They still want the personal touch in banking, the ability to put a face to a name; and they want the convenience of mobile or online banking.”

Many big banks – such as SunTrust, Bank of America and Wells Fargo – have been at the forefront of paring their branch networks in recent years, according to the FDIC. But in most cases, they have also been the first to offer their customers remote banking technology, while community banks have been slower to adopt such services, Sleaford said.

As the number of branches keeps declining, customers need to be smart shoppers when it comes to choosing a financial institution, Smith said. If your bank closes the branch down the street from your home, decide how important such convenience is to you, he said.

“These days, you don’t necessarily worry about the long-term relationship with a bank,” he said. “Banks really don’t know what their services will look like in five years any more than you do. They will adapt to whatever changes happen, and that’s also what you need to do as a customer.”

What to Do When Your Bank Branch Disappears:

• Decide how important branch convenience is to you.
• Determine whether to stay with your current bank.
• Consider using online or mobile banking.
• Shop around. Consider banks that still have nearby branches.
• Use only safe, unpredictable passwords in mobile/online banking. Don’t save them in your browser.
• Do online/mobile banking only at home or other safe, secure sites.

SOURCE: Orlando Sentinel research