According to a new study released by the Federal Deposit Insurance Corporation, while consumers may be increasingly reliant on mobile and online banking services, the emergence of electronic banking has had little impact on the number of traditional branch offices. Since 2009, the number of branch offices has declined just 4.8 percent, dropping from 99,500 to 94,725 offices in July 2014.
That's not to say that emerging technologies have not had any impact on brick-and-mortar branch locations. In fact, it is one of the four factors--along with population growth, banking crises, and legislative changes--cited by the FDIC for the modest decline in the total number of branches. But its greatest effect has been a decline in the number and frequency of transactions taking place at physical banking offices.
According to the FDIC's study, the average number of teller transactions per office declined by 45 percent between 1992 and 2013, from 11,700 transactions per month to 6,400. Using a credit or debit card has become more common than writing a check, says the FDIC. Paper checks accounted for only 15 percent of noncash payments in 2012, down from 46 percent in 2003. The total number of noncash transactions grew by 50 percent from 2003 to 2012, as the number of checks written declined.
In addition, the rise of remote deposit capture—scanning checks from a home or business and sending them to the bank electronically for deposit, more sophisticated ATM terminals, and the proliferation of smartphones appear to be reducing the frequency with which bank customers are visiting their local branch to perform simple transactions, says the FDIC.
Despite these changes, consumers continue to value and use physical banking offices. According to the 2013 FDIC National Survey of Unbanked and Underbanked Households, visiting a teller remains the most common way for households to access their accounts. Even among households that preferred online or mobile banking, most also reported visiting tellers to access their accounts.
So what does this mean for banks? It means that, for as long as personal services and relationships remain important, bankers and their customers will likely continue to do business face-to-face. It also means that as the number of transactions and frequency of office visits decline, each interaction between bankers and their customers will become more and more important to retaining customers, placing an even greater emphasis on customer service than ever before.
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