Mercator Perspectives

Branch Consolidation Continues, but Channels Soften the Blow

As banks and other financial institutions seek ways to replace lost revenues, reduce costs, and increase overall efficiencies, they are discovering the value that channels can provide as part of a revised business strategy.

This is taking place as many financial institutions are reducing their branch footprint. The total number of bank branches was down about 2.2% percent between 2009 and 2012, with smaller institutions undergoing larger reductions. For example, the number of savings institutions’ branches was down 22% during this period, and down 37% from their peak in 2006.

In the meantime, improved channel efficiencies have offered new opportunities for customers and financial institutions alike. In one example, a sizable community bank in Massachusetts notes the number of teller transactions is down about a third over the past three years, much of which is attributed to the increased use of their mobile banking product.

All of this reinforces the importance of channels in the strategic plan of today’s financial institutions, and the important contribution they can make to the bottom line of these institutions today, and in the future.

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