How Many Bank Branches do we Need in the US?

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25 May 2012


  • Next thing to do is to not define customers by channel. BoA has '10 million mobile banking customers' or does BoA have customers, of which 10 million are active users of the mobile channel? The vast majority of the customers would not describe themselve as 'mobile banking customers' as this is one of a number of channels that they expect. If mobile was not available, some customers would leave, if mobile was the only available channel, it is likely that many would leave. The same is true for branch.

    There is no answer for banks in evaluating channels independently, The solution is about the mix of all channels; branch, call centre, web, mobile, 3rd Party etc. The distribution of the channel investment will vary based on the target market and not all target markets need all of the channels. The exciting thing about retail banking is that banks should now think about having different channel strategies to their competitors. The days of replicating every technology move by your competitor is gone.

  • Well said, Grahm.

  • [...] encourage you to read the How Many Branches post as it’s asking productive questions. Here I’ll suggest another direction because I [...]

  • @Bob, I like how you're thinking here. If you abstract up to another layer, what about reinventing the branch? The prevailing assumption is that clients and prospects want to transact there, hence the "convenience" justification. Although I agree with @Graham that the quoted mobile adoption figures don't smell right, it seems obvious that directionally more transactions are shifting to self-service.

    At the same time, most banking services have long commoditized, so banks have become "infrastructure" for many of their clients. I think they can reinvent their relationships with some client types by focusing on supporting client business outcomes online. Most leading banks have experts in business process, industry trends, etc., but existing processes are too costly to deliver experts' knowledge to market. Many-to-many social networks change the game because, by letting clients/prospects run discussions, they set the context, and when the expert interacts with people publicly, s/he activates the network effect.

    But back to branches. I think that banks could repurpose part of existing locations to serve people in new ways at relatively low risk. For example, laptop- and smartphone-toting mobile workers are a very attractive demographic that is underserved around the world. There's an opportunity to repurpose part of select branches' space to create coworking spaces for clients--and use a digital social network to add leverage. Imagine coworking spaces positioned between airport lounges and Starbucks. Here's a detailed picture: in case helpful.