With ATMs, banks have good reason to keep their physical branches open. Many believe that with the advent of online banking and other non-branch services, banks should be slowly shedding away physical branches due to the cost of keeping them running. However, people still find physical bank branches useful. More importantly, with bank-branded ATMs, there are certain benefits for customers to come visit. There are many things keeping the physical bank relevant, and it's unlikely that it'll change any time soon.
One of the common arguments about physical bank branches is that they aren't around as much as they used to be. However, the Federal Deposit Insurance Company, the primary protector of bank accounts across the country, says otherwise. In a study reported by Credit Union Journal, the FDIC found that while the number of branches has declined somewhat from its peak in 2009, there are still more of them than at any time since 1977, the year the first non-branch technologies were deployed on a wide scale.
Notably, there were 2.9 bank branches per 10,000 people in 2014, according to the study. That equates to physical branches having an average reach of approximately 3,450 people. Now, certain transactions are taking place less than they did before, thanks to ATMs and other services. Bank teller transactions dropped 45 percent from 1992 to 2013. However, branches have adapted to the change by focusing on providing other services to customers.
In many ways, ATMs have helped ease this transition. As Micah Solomon of Forbes notes, customers come to bank branches for more complex banking needs. For example, they may look to request a loan or get a mortgage for a home. They may have business financing needs they have to consider. By shifting away from transactions and creating a physical sense of location, banks have a reason to keep these branches running. ATMs help this process by dealing with most other transactions. With many non-bank ATMs requiring a fee to use, consumers also feel more comfortable using the ATMs at their local branches to deposit or withdraw cash. With this in mind, banks will remain relevant in the years to come.
March 12, 2015