Banks Without Branches Spreading Fast

“In the coming years, banks will be founded without branches,” predicted Israel’s Supervisor of Banks Hedva Ber at the Knesset Science and Technology Committee on Wednesday, Globes reported.

Change is sweeping the industry, Ber said, noting that 80 percent of bank customers subscribe to direct banking channels, 50 percent subscribe to online banking services, and 50 percent of transactions are conducted outside the bank branches.

All told, as bank branches opened and closed around the country, a net 56 branches were closed in the past four years, or 4.5 percent of all branches.

Ber touted the advantages of digitization: Digital transactions are 75 percent cheaper than transactions conducted at branches, she said. For example, bank transfers, cash deposits, depositing checks, and cash withdrawals cost NIS 6 when conducted by a bank clerk, compared with NIS 1.50 on a direct channel. In addition, the computerized system makes services available to customers in outlying areas, whereas before full service could be had only in the cities. And transactions can be conducted at all hours from home or office, making it easier for working people to do their banking.

However, committee chairman MK Uri Maklev (United Torah Judaism) was unenthusiastic, saying, “The problem is not branches closing down; it is the reduction of frontal services. There are major population groups – the outlying areas, senior citizens, the handicapped, and others – for whom this revolution is liable to widen the gap.”

Dalia Resnick, from the Ministry of Social Affairs and Social Services, expressed a similar concern: “Some of the population will not have access to technological processes if they are not trained. There are 160,000 people eligible under the Community Long-Term Care Insurance Law, and I am very worried that they will suffer from the transition. They are already being exploited economically by workers and their families, and I fear that the transition will make it worse.”