Why the bricks-and-mortar bank branch is still standing strong
With the advent of the internet and all sorts of new financial technologies, doing stuff with money is easier than ever. So the bank branch office should be going the way of the rotary-dial telephone, right?
Actually, not so much — at least according to the latest data from International Monetary Fund.
Every year, the IMF conducts a global survey to assess people’s access to financial services. Among the many indicators it tracks is the availability of commercial-bank branches (including locations offering only ATMs or other automated services).
The most recent data, published earlier this month, show the number of branches per 100,000 adults holding remarkably stable in recent years. As of 2016, the population-weighted average for 134 countries and territories was 17.04. That’s down a bit from 17.49 in 2012, but still more than before the 2008 financial crisis.
That’s pretty weird. For years, bankers and technology executives have — entirely reasonably — been predicting the imminent demise of the branch. What gives?
Well, for one, a lot of people still prefer human interaction: in 2016, the US Federal Reserve reported that 84% of bank customers had visited a branch and spoken with a teller within the preceding 12 months. Also, it turns out that millennials actually like having the option of going to the bank.
That said, branches are disappearing faster in some places. Europe’s notoriously bloated financial sector, for example, sharply reduced its physical presence after the 2008 crisis and subsequent euro turmoil. Countries in the currency union had a population-weighted average of 32.44 branches per 100,000 adults in 2016, down from 45.76 in 2008.
Among euro-area countries, Spain and Italy remain the most abundantly branched, suggesting that they might yet have some more consolidating to do.
To be sure, the bricks-and-mortar bank still faces an uncertain future as people increasingly adopt new ways of borrowing, investing and paying one another.
So far, though, the physical branch — or at least its automated version — is proving surprisingly resilient.
• Whitehouse writes editorials on global economics and finance for Bloomberg View. This column does not necessarily reflect the opinion of the editorial board or Bloomberg and its owners.