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Where Do I Go With All My Branches?

Many bank and credit union executives are noodling over their branch networks. Do we grow them? Shrink them? Reduce their size? What’s one to do?

Since 2008, the number of bank branches has fallen by more than 4,000 locations.1 Before you get alarmed, realize that history tells us that over the past 50 years, there have been two periods of branch consolidation. The first followed the savings and loan crisis of the late 1980s. The second, as evident in the accompanying chart, came on the heels of the 2008 recession.

Outside of those two time periods, the number of bank and credit union branches in the U.S. has increased.

Banks Opened Graph
*Federal Deposit Insurance Corporation

As we recover from the latest financial crisis, it is likely that we are coming to an end of the most recent branch consolidation period. So much so, that a recent study by The Financial Brand states that one out of every three financial institutions report they will grow their branch network, while less than 10 percent expect to close branches in 2015.2 But there will be one difference — brick and mortar locations will more than likely be three times smaller than the facilities of the past. Although the size of the branches will decrease, we must keep in mind that account holders enjoy visiting their financial institution’s locations, especially if these account holders are satisfied with the online banking experience.

So what is the best approach for financial institutions moving forward? They must ensure account holders can access their accounts through a network of channels, including branch, telephone, online and mobile. At the same time, it’s time to seriously consider the case for the universal banker.

Account Holder Graph
*McKinsey and Company

Source:

1. Federal Deposit Insurance Corporation
2. The Financial Brand

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