Branch networks expected to halve as more customers go online
16 July 2012 | 9312 views | 2
As much as 50% of existing retail bank branches in the developed world will be obsolete by 2020 as banks assess their space requirements in the face of continued growth in online and mobile banking, according to forecasts by real estate agency Jones Lang LaSalle.
The startling decline in branch banking in the developed world is expected to be offset by growth in frontier markets such as Brazil, China and India.
James Brown, head of Emea retail research & consulting at JLL says: "Historically, a retail bank's sole customer sales and service channel was through a large branch network. The rapid ascent of telephone, online and now mobile banking continues to accelerate change and innovation into the retail and banking industry."
Excess branch networks won't disappear overnight, he says, but the trend will be one of a steady run-off as property leases expire and banks place far more emphasis on being in the right place with the right space at a right price.
A 'hub and spoke' model is expected to prevail, whereby premium flagship branches in big cities cater for the more sophisticated products and services, and smaller satellite branches give access to basic banking services.
"Whilst we are still seeing new entrants opening physical branches, our research highlights that most developed markets across America and Europe are 'over-banked'", says Brown. "We predict that as a result of 'right-sizing' and embracing technology, 50% of retail branches in these developed markets will be obsolete in their current format by 2020."
In addition to branch real estate strategy, in both the developed and developing world, future location strategies for data centres will loom large, as digital technologies dramatically increase secure data storage requirements