Are You Sure You Want To Invest More In Bank Branches?

In its investor presentation regarding its acquisition of ING Direct, Capital One included the following slide:

My take: Are you sure you want to invest more in your bank branches?

June 17 UPDATE: For kicks, I thought it would be interesting to see where the lines would go if the trends extended out to 2011:


  • Percentage of consumers banking at a branch (at least once in prior 12 months) dropped nearly 30 percentage points since the beginning of the century.
  • The growth rate in online banking leveled off in the mid-90s, then jumped in early 2000s. Why? My guess: The first crop of Gen Yers reaching adulthood.
  • The debit card percentage is misleading. Nine of ten checking account households might have a debit card, but that doesn’t mean that nine of ten uses a debit card.
  • There’s something wrong with these estimates. Why? The numbers I’ve seen from various sources suggests that the percentage of US households that are unbanked is anywhere from 5% to 15%. Even at the low end, that means that 100% of US households could not have been banking in a branch throughout the 80s and into the 90s. I think the chart would have been appropriately labeled “Percent of U.S. banking households.”



8 thoughts on “Are You Sure You Want To Invest More In Bank Branches?

  1. Data doesn’t hold for small biz customers. Just argues for a rethink of branch strategy, footprint, and total channel spend.

  2. This chart is certainly useful in some ways, but requires complementary data on sales and initiation of relationship. My experience is that branches are being outmoded in terms of their role as service centers, but not in terms of their role as distribution centers. Regulations still make opening an account online more cumbersome than necessary, and I would hypothesize that the majority of banked households open accounts in person. In that regard, branches are still necessary as a growth engine.

  3. Marc: Couldn’t agree with you more. However, there’s a trend among some banks to pump big money into branch redesign. Some of the designs are great candidates for inclusion in Architectural Digest. Is that’s what’s needed to drive sales? And the other question that needs to be addressed is: WHY are so many accounts opened in the branch vs. other channels? Some would argue that people want face to face interaction, human contact, have more confidence in branch, etc. I’d argue that banks simply haven’t made the non-branch process simple and good enough. And yes, there is a regulatory constraint in there, as well.

  4. Now that i have reread this on a PC and not my phone, I wonder if the accelerated online banking adoption in 2000 had more to do with the web and its vast improvement as an interaction medium over PC based banking that dominated until then (i still remember the 8 3.5″ floppies Bank of America sent me to install MYM (remember those guys?)

    Makes you wonder at which point in the next few years the mobile apps get so good that the adoption curve angle gets sharp again. Combine that with your demographic argument and you may have understated the rate of change we are about to see.

  5. Piling on, great points both of you. When the non branch account opening process is equal or better, folks will stop going to branches for that. And since most banks WANT people to come into the branches so they can cross sell them, upsell them, et al, they haven’t put the time or effort to fix the process. Meanwhile, USAA and INGDirect and PNC’s Virtual Wallet laser focus on branchless banking and will keep them far ahead and growing at a greater organic clip than most others.

  6. JP: You bring up a good point that I think a lot of people overlook (which I guess I did with my Gen Y comment): It isn’t just demand-side factors that drive adoption, there’s a supply side component. Not only do mobile apps need to get better, they need to get….installed in the first place. We’re nowhere near 100% availability of mobile banking at banks and credit unions (there are still banks and CUs that don’t offer online banking).

  7. Isn’t there something to be said at this point for User Experience design?

    Regulation will always be cumbersome, because it’s written by people who worry, and love comprehensiveness.

    Elegant design is the art of simplifying the complex – and what customers pay their bank to do.

  8. “Elegant design is the art of simplifying the complex – and what customers pay their bank to do.”

    Damn. I have a presentation I’m scheduled to give on Thursday, and if I hadn’t already submitted my slides to the client, I would have stolen that quote and put it in my deck. Spot on.

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