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The future of retail banking has rarely been murkier. Here are five questions about branches, layoffs, technology and revenues that bankers need to be asking.
March 12 -
Traditional bankers could be forgiven for hoping that the direct banks would have gotten their comeuppance by now. But the branchless (or nearly branchless) upstarts look to be very much on the ball.
March 1 -
SunTrust Banks (STI) will close around 40 branches this quarter as it continues its efforts to rein in costs, its chief executive said Tuesday.
March 5
PHOENIX — The bank branch is dead. Long live the bank branch.
At an industry conference Tuesday, critics and defenders of branches staged a spirited debate over the future of brick-and-mortar banking. Judging by the audience's reaction, the critics won.
The debate, which was held at the Consumer Bankers Association's annual conference in Phoenix, was meant to be a lighthearted affair, but it got fiery at times.
Richard Hunt, the trade association's president and the debate's moderator, staged the event as a mock episode of "Family Feud," the long-running game show, pitting the "Branch is Alive" family against the "Branch is Dead" family.
Leading the charge for the branch's critics was Brett King, author of the book Bank 3.0. He compared banks to a range of companies in other industries — from Kodak to Borders Books to Tower Records — that have seen their businesses upended by the digital revolution.
King cited data showing that customers are making 33% fewer branch transactions since 2010 and are visiting branches 85% less than they were in 1995. He also predicted that one-third of today's U.S. bank branches will be closed within the next few years as consumers become more and more comfortable using their smartphones for day-to-day banking.
"And that's going to happen very quickly, far more quickly than we realize," King argued.
Bankers from BB&T (BBT) and TD Bank pushed back hard against that way of thinking, and even took a shot at their chief opponent. "We don't have a book to sell over here," remarked Linda Verba, executive vice president of retail operations at the $219 billion-asset TD Bank, which has more than 1,300 branches in 15 eastern states and the District of Columbia.
The panelists who were defending bank branches noted that certain key groups of customers, including small-business owners, still rely heavily on branches. They also noted that closing branches often means losing lots of profitable customers.
"We are in the people business. And absent a customer, you have no business," Verba said.
"There's still a substantial amount of customers who need advice," added Rip Howard, retail group executive at BB&T, "and they look to their banker."
BB&T has $181 billion of assets and nearly 1,850 branches in 12 states and Washington, D.C.
But the branch's critics responded that many of the reasons that customers still visit branches — such as applying for a mortgage — are a matter of necessity rather than choice. "The instinct for people today, if I'm looking for a mortgage, is to go to Google," King said.
At the end of the debate, the anti-branch panelists were asked what would convince them that they are wrong.
"I would say, if hipsters in Brooklyn start using checks to pay each other that would change my mind," responded Kevin Travis, a partner at Novantas LLC.
Audience members were apparently convinced. Before the debate, a poll of conference attendees showed that 68% of attendees believed that branches have a bright future. After the debate, that number dropped to 51%.
