There’s a popular narrative surrounding the current state of retail banking, and it goes something like this: millennials are turning to mobile experiences to meet their banking needs, and apps like Venmo and Robinhood are supplanting many traditional bank offerings. According to the narrative, the consequence is that physical bank branches are closing at a record rate.
It’s hard to argue with the data. As the Wall Street Journal reported in February:
“Banks are closing branches at the fastest pace in decades, as they leave less profitable regions and fewer customers use tellers for routine transactions.
The number of branches in the U.S. shrank by more than 1,700 in the 12 months ended in June 2017, the biggest decline on record, according to a Wall Street Journal analysis of federal data.
Branch numbers fell again in the second half of 2017, according to related data submitted to bank regulators and reviewed by the Journal. That would add to the thousands of locations closed following the financial crisis, and is the longest stretch of closures since the Great Depression.”
This narrative makes sense at first glance. Millennials, after all, have had a hugely disruptive impact on many industries, including retail, forcing an overall shift towards digital and mobile experiences.
However, take a closer look at data across the industry and a more complicated picture emerges. JP Morgan, for example, is adding 400 new locations in around 20 new markets. Why? They’re taking advantage of new customer needs that can be better served by physical locations and ceding certain functions to mobile. Per Business Insider:
"[Y]oung earners in their 20s and 30s just don't need a physical branch for most of their routine banking anymore — mobile and digital options and ATMs suffice for moving money around, paying bills, and opening accounts… They really would like to come to the branch for experiences and advice more so than everyday transactions."
In fact, fewer than half of millennials prefer mobile-only banking, and that number drops substantially for older demographics:
Retail bank locations are closing because their traditional functions have been replaced by apps, but that doesn’t mean that physical banks are inherently flawed, it just means that modern customers have new expectations for what a physical bank location offers. Banks are under new pressure to provide an intuitive mobile app for basic banking needs as well as a physical branch where consumers can develop a trusted relationship with staff.
How can retail banks successfully adapt to these expectations? It’s all about creating a cohesive customer experience across digital and physical sites.
Compelling, anticipatory experiences, on any channel, requires a single view of every customer in a location where it can be quickly leveraged and built upon. Customer data platforms (CDPs) provide a marketer-controlled, flexible database that consolidates data, ties it to single customer identities, then integrates with customer-facing channels.