Warc, 28 January 2013
NEW YORK: Rising interest in digital services and growing
regulatory pressures are causing a major rethink in strategy among US retail
banks, many of which are closing branches and expanding online.
According to SNL Financial, the business intelligence
provider, some 2,267 bank branches were shut in 2012, when 1,149 began trading,
leaving a negative net balance of 1,118 closures, CNN reported.
One reason for this shift is the rising number of people
using new media channels to manage their finances. Bank of America, for
example, has 30m active web customers, from a clientele of 55m consumers and
small businesses.
SNL Financial reported that Bank of America closed 244
branches in net terms last year, as part of an approach attempting to match
evolving customer needs.
"We continue to optimise our service network, our
branch network as online and mobile banking numbers continue to increase. We're
now averaging about 10,000 new mobile subscribers a day," Brian Moynihan,
the chief executive of Bank of America said this month.
Indeed, Forrester, the research group, has predicted 61m
people will use mobile banking tools in the US in 2013, compared with an
estimated 47m in 2012. This audience was pegged to hit 108m in 2017.
Nancy Bush, a bank analyst at SNL Financial, argued such
trends were gaining ground. "You're just not going to have a branch on
every corner anymore from here on out," she said.
Elsewhere, Wells Fargo's branch network shrunk by a total of
61 outlets in 2012, with the Royal Bank of Scotland on 59 and PNC on 50.
M&T Bank posted a score of 48 on this metric, while
Capital One registered some 39 closures overall, the study added.
Many closures are taking place in major cities where
consumers have access to a large number of branches and are increasingly using
the internet to fulfil basic tasks.
"We will never have a branch-free banking industry,
it's just that they're going to be more concentrated and less present in
non-urban markets," said Bush.
Alongside changing consumer habits, the legal pressures
facing banks are also posing considerable challenges, Bush suggested.
"All the costs of regulation are pressing on banking as
a whole, and with a low interest rate environment it's harder and harder to
make money," she said. "They have to look for a way to offset
that."
Data sourced from CNN; additional content by Warc staff
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