Will bank branches wither away?
WASHINGTON, D.C. -- The new Citibank branch in Washington's Foggy Bottom neighborhood, around the corner from a Whole Foods and Roti Mediterranean Grill, looks more like an Internet café than a place you'd go to cash a check.
There are no brochures — this is a green building, so unnecessary paper is discouraged. Bank employees use a wall-mounted computer screen to show customers different types of checking accounts and other bank products. Customers who need to wait for assistance can use one of the branch's computers to review their online accounts or log onto their own computers in the Wi-Fi lounge.
The branch, similar to Citi's flagship branch in New York, is designed to create a "friendly environment" for tech-savvy people and increase Citi's footprint in the Washington metro area, says Cece Stewart, president of U.S. consumer and commercial banking.
But before Citi can demonstrate the branch's smart technologies, it has to get customers to walk in the door. That's a significant challenge for Citi and other banks with branch networks, because it's easier than ever for bank customers to conduct most, if not all, of their bank business online, on their smartphones or at an ATM.
In the past year, the number of bank customers who prefer to bank online has jumped sharply, according to a survey conducted in August by the American Bankers Association. Sixty-two percent of bank customers said they prefer banking online to all other methods, up from 36% in 2010. Only 20% of customers said they preferred using a branch, down from 25% last year.
The trend isn't limited to younger consumers. Fifty-seven percent of bank customers age 55 and older said they prefer banking online to all other methods, up from 20% last year.
Perry Miller, 55, of Claremont, N.C., falls into that category. He closed a bank account with Wells Fargo awhile ago in favor of a credit union and brokerage accounts with Schwab, Fidelity and Vanguard.
Miller, pastor of the Bethlehem United Methodist Church, conducts nearly all of his transactions online or through an ATM. When he needs to deposit a check, he takes a photo with his smart phone and deposits it electronically into his Schwab account. "Who needs brick-and-mortar and a teller?" he says.
Other customers, though, still value the human touch. Margaret King, 64, director for the Center for Cultural Studies & Analysis in Philadelphia, has an account with Wells Fargo because she likes having access to branches across the country.
"I need the ability to walk into a 3-D bank and talk directly to staff there with checks, documents or bank statements in hand to resolve any problems," she says. "This is much harder to do in the online world."
Bank branches aren't in imminent danger of extinction, but there are too many branches to serve the shrinking number of customers who use them, says Bob Meara, senior banking analyst for Celent, a consulting firm. While the total number of branches has declined since 2009, there are nearly four times as many branches now as there were in 1970, when customers didn't have access to ATMs or online banking, he says. "Help me understand why we need so many more branches now than we did then."
