22 February 2017
Visit dh.com

Bank branches set to disappear as more customers go online

21 September 2012  |  9899 views  |  0 branch banking

Ratings agency Fitch is forecasting a decline in US bank branch networks amid ongoing increases in technology use and changing customer behaviors.

Fitch expects both fewer numbers of branches and different types of branches to emerge as banks look to rationalise real estate expenses while investing in new online channels.

The ratings agency is forecasting increased technology spending over the near to intermediate term by the banks to improve efficiency and streamline operations.

States Fitch: "While over the near term these additional technology expenses may offset cost savings from culling bank branches, longer term it should improve earnings and, therefore, returns to shareholders."

From a credit standpoint, Fitch views the reductions in costs, and therefore improvement in earnings, as the biggest near-term positive. The firm further believes the larger banks with more resources should benefit to a greater degree from both a technology spending and cost-savings perspective.

"Banks unable to adapt their branch models quickly enough may suffer declining market share and customer attrition," says Fitch. "Additionally, the increased use of technology makes it easier for customers to move funds from one bank to another, which could have the unintended impact of increasing customer attrition rates and decreasing the stickiness of deposits."

The retreat from the high street is epitomised by Bank of America, which is expected to cut a further 16.000 jobs by year-end as it accelerates a cost-cutting programme that will see the closure of 750 branches over the coming years as more customers embrace the digital lifestyle. The bank, which claims over 10 million mobile banking customers, is planning to close 200 branches this year on top of 178 it closed in 2011.

Similar trends are apparent in other markets around the world. Analysts at Credit Suiisse in Australia are forecasting a massive reduction in the branch networks run by the big four Australian banks. With branch transaction volumes sliding by about five per cent a year, the analysts forecast that as many as a quarter of the 4000 branches operated by ANZ, CommBank, Westpac and NAB could disappear over the next five years.

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

HSBC customers to get account access at Post Office branches

HSBC customers to get account access at Post Office branches

17 September 2012  |  5607 views  |  1 comments
Australia's CUA opens concept branch

Australia's CUA opens concept branch

06 September 2012  |  5675 views  |  0 comments
Bradesco opens the bank of the future

Bradesco opens the bank of the future

30 August 2012  |  20255 views  |  4 comments | 2 tweets
Young Brits still visit bank branches - they're usually closed though

Young Brits still visit bank branches - they're usually closed though

01 August 2012  |  7617 views  |  8 comments
Branch networks expected to halve as more customers go online

Branch networks expected to halve as more customers go online

16 July 2012  |  9213 views  |  2 comments
Virgin Money opens first store

Virgin Money opens first store

09 July 2012  |  11338 views  |  0 comments
South African banks modernise branches

South African banks modernise branches

22 June 2012  |  6075 views  |  0 comments
Branch still best for personal attention and expertise - Cisco survey

Branch still best for personal attention and expertise - Cisco survey

21 June 2012  |  5559 views  |  2 comments | 2 linkedin
"Brutal" jobs cuts at RBS spark debate on branch investment

"Brutal" jobs cuts at RBS spark debate on branch investment

19 June 2012  |  7648 views  |  0 comments
Virtual branches and Facebook payments: Poland gets new digital bank

Virtual branches and Facebook payments: Poland gets new digital bank

18 June 2012  |  21047 views  |  1 comments | 2 tweets
Metro Bank raises £126m to fund new branches

Metro Bank raises £126m to fund new branches

11 June 2012  |  6005 views  |  1 comments
US banks consider IT top spending priority; shift from branch to mobile evident

US banks consider IT top spending priority; shift from branch to mobile evident

06 June 2012  |  9149 views  |  0 comments | 1 tweets
Bank of America claims 10 million mobile customers; accelerates branch closure programme

Bank of America claims 10 million mobile customers; accelerates branch closure programme

24 May 2012  |  15268 views  |  0 comments | 2 tweets | 1 linkedin
BMO expands retail video conferencing service

BMO expands retail video conferencing service

18 January 2012  |  5337 views  |  0 comments
Movenbank promises to 'reboot' banking at Sibos

Movenbank promises to 'reboot' banking at Sibos

19 September 2011  |  14708 views  |  3 comments
Mobile to become mainstream banking channel - Sabadell

Mobile to become mainstream banking channel - Sabadell

29 July 2011  |  15132 views  |  3 comments | 1 tweets

Related company news

 

Related blogs

Create a blog about this story (membership required)
Visit contisgroup.com

Top topics

Most viewed Most shared
IBM and Visa join forces to turn billions of connected devices into points of saleIBM and Visa join forces to turn billions...
18733 views 11 comments | 56 tweets | 92 linkedin
EBA to relax controversial PSD2 authentication rulesEBA to relax controversial PSD2 authentica...
9591 views comments | 49 tweets | 67 linkedin
Kevin the bot uses blockchain to offer insurance for P2P transactionsKevin the bot uses blockchain to offer ins...
8812 views comments | 19 tweets | 15 linkedin
RBS to become fintech fund and high street outlet for challenger banks under HMT remedyRBS to become fintech fund and high street...
7518 views comments | 37 tweets | 33 linkedin
hands typing furiouslyBlockchain Technology
7331 views 0 | 6 tweets | 1 linkedin

Featured job

Six Figure Base + Commission + Stock Options
London

Find your next job