The number of bank and credit union branches across the country will contract by more than a third over the next decade, according to a recent report
The report, “Branch Boom Gone Bust: Predicting a Steep Decline in US Branch Density,” said the U.S. will see a 30 to 40 percent decline in the number of bank and credit union branches over the next 10 years.
The report by Celent, a global and financial services research and advisory firm, said the contraction will be driven by customers’ increasing use of Internet and mobile banking services, cost pressures on banks and credit unions, and a steady decline in branch transactions.
It said in the past 20 years, the number of bank and credit union branches in the U.S. has increased 280 percent and that financial institutions have “not reacted to the growth of digital channels like other retail segments.”
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Intrust Bank division director Lyndon Wells said his bank, the area’s largest locally based bank, doesn’t plan to expand its branches in what he calls its “mature territories,” which include Wichita.
“The physical cost of facilities is not the long-term cost,” he said. “What we’re most concerned about is staffing those facilities with human resources to respond to those customers,” he said.
Wells said Intrust “still has lots of traffic in our branches.” But, the bank does evaluate its branches regularly, especially those that operate in leased facilities.
“Recently we commissioned a group to look at our branch networks and help us optimize them,” he said. In the Wichita area, Intrust has 30 branches, which include freestanding buildings as well as branches inside some Dillons grocery stores.
According to data from the Federal Deposit Insurance Corp., the number of branches in the Wichita area increased nearly 10 percent between 2002 and 2012, while the number of banks doing business in the area decreased by three to 56.
Jim Holt is president of Mid American Credit Union, which earlier this year opened a full-service branch in northeast Wichita at 29th and Webb. Holt said he expects his board to begin having a discussion soon focusing on the credit union’s branch strategy. Its network currently includes two full-service branches in Wichita, a branch it jointly owns and operates with Cessna Employees Credit Union in south Wichita, and a branch that it acquired in Arkansas City.
Holt said he thinks branches remain an important part of how his credit union delivers services and are something customers expect to have.
“What we’ve learned in the last 20 years is members want every conceivable option (to access the credit union) they can get,” he said, including Internet and mobile banking, ATMs and branches.
He thinks branches may change – by becoming physically smaller, but will still need to find ways to meet consumers’ expectations and needs.