Several months ago, I mentioned how Bank of America Chairman and CEO Brian Moynihan believes that the need to be omni-channel is one of the keys to success for a bank that operates today. He said, “Despite people saying ‘I never go into a branch,’ they all do.”
While there’s a lot of talk about banks cutting the number of branches they have, a recent Reuters article confirms that it’s happening at a slower pace than one might think. In fact, 93,283 new branches popped up last year. While that’s a decline of 6% since 2009, when the most number of brick-and-mortar locations opened, retail branches remain critical to gaining new customers and cultivating existing relationships.
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Other bank executives share the same point of view. According to Jonathan Velline, Wells Fargo’s head of ATM and store strategy, “Our customers still want to visit us. They’re still coming to our stores and our ATMs at pretty consistent rates.”
But bank branches aren’t cheap. Ed O’Brien, an analyst at Mercator Advisory Group, indicates that a branch can cost between $2-4 million to establish and $200,000-400,000 annually to operate. Although it often takes a 10 years for a branch to “reach its full potential,” JPMorgan says each of their branches can earn $1 million in annual profit.
The bottom line is this: Even with the increasing demand for digital, successful banks understand the need to continue to offer multiple channels of customer interaction, even good ol’ brick and mortar branches.”