Us banks want to cut branches but customers keep on going – timesofmalta. com
Despite banks’ nudging toward online tools, many US customers are not ready to give up regular visits to their nearest branch, complicating the industry’s efforts to slim down.
US banks have trimmed the number of branches by six per cent since it peaked in 2009, according to Federal Deposit Insurance Corp data. Noodles and company sandy The 93,283 branches open at the end of last year was the lowest level in a decade.
Yet analysts who have examined the data say banks should have done more to offset the pressure on revenue from low interest rates and regulatory demands.
The number of FDIC-insured banks has fallen by more than 25 per cent over that time even as industry assets have grown, indicating room for greater branch consolidation.
Bank executives argue, however, that branches remain crucial for acquiring new customers and doing more business with existing ones. Noodles and company data breach Closures, they say, would hurt revenue more than help reduce costs.
“Our customers still want to visit us,” Jonathan Velline, Wells Fargo’s head of ATM and store strategy, told Reuters in an interview. Noodles and company eagan “They’re still coming to our stores and our ATMs at pretty consistent rates.”
Bankers across the industry share that view. Noodles and company vacaville They say online banking complements traditional services for US customers, but few have gone fully digital.
The US falls somewhere in the middle among developed nations in terms of how aggressively its banks have been slimming down, according to the International Monetary Fund’s population-adjusted data.
They have cut relatively more branches than banks in Germany, France or Canada, but not nearly as many as those in Greece, Ireland, Spain or Italy.
While other factors are at play, one difference is that US customers still routinely use cheques and need branches to process them, said Rick Spitler, managing director at consulting firm Novantas.
“This thesis that we have mobile banking and high-tech banking, therefore the branch offices are dinosaurs and going away appears to be substantially overstated,” he said.
The case for reining in sprawling branch networks as a way to cut costs looks compelling. Noodles and company calories The traditional branch costs roughly $2-4 million to set up and $200,000-400,000 per year to operate, according to Ed O’Brien, an analyst at Mercator Advisory Group.
For instance, an eight-block stretch near Manhattan’s Penn Station houses 14 bank branches: Astoria Bank, Apple Bank, Capital One, Citibank, HSBC, PNC, TD Bank, Sterling National Bank, Wells Fargo, two Bank of America branches, and three Chase branches. Yaya noodles menu Yet bank executives argue that, in a competitive market, they need to be footsteps away from the best customers.
Executives at JPMorgan Chase & Co, the country’s largest bank, say each branch earns about $1 million in annual profit, but takes a decade to reach its full potential.
Chase bankers regularly scrutinise data on branch foot traffic and what customers do while inside to determine whether a location should remain open, shut down or shrink.
The bank has shut 265 locations since 2013, roughly five per cent of its network but executives insist that branches remain essential for JPMorgan’s relationships with customers.
They are the best way to sell clients many products and services ranging from mortgages to investment advice, according to Gordon Smith, JPMorgan’s head of consumer and community banking.
“Often I will be asked why we don’t just accelerate closings. Noodles and company lakewood co Why don’t we close 400 or 500 branches?” Smith said at the 2016 investor day. Noodle or noodles “The answer is that customers won’t go there.”
John Elmore, vice chairman of community banking and branch delivery at US Bancorp, says branches are especially important for small businesses that need to deposit cash frequently, prefer to negotiate loans in person, or want strategic advice.
“Proximity to their business is a very, very important factor to their bank selection and their continuing relationship with a bank,” Elmore told Reuters.
Their ATMs can perform more sophisticated tasks and banks have developed nifty mobile apps for routine banking needs. What is in noodles They are even experimenting with digital loan underwriting.
JPMorgan and Wells Fargo data show most customers visit branches several times every quarter, though younger clients tend to visit less often.
It may be too early to tell what happens in the long run when a big bank shutters many branches. Noodles and company village crossing Bank of America Corp, which has closed a quarter of its branches since 2009, could eventually serve as a test case. Noodles and company healthy The bank says it is done with cuts, but Keefe Bruyette & Woods analyst Fred Cannon calls for more.
James Abbott, investor relations chief for Zions, said the group had eliminated roughly 20 per cent of its branches since 2009 and continued to evaluate further cuts. Noodles & company coupons The other banks did not provide a comment for this story. Noodles resturant Cannon argues their costs are too high, and that they could eliminate locations without giving up much revenue.