Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
65% of Global banking executives see branch-based models dead in 5 years
Business Insider | Matt Gaughan | Jul 7, 2021
- In just five years, the physical framework of banking will be "dead," according to bank executives around the globe.
- Branches will be supplanted by digital ecosystems supported by emerging technologies.
- Insider Intelligence publishes hundreds of research reports, charts, and forecasts on the Banking industry. Learn more about becoming a client.
See: Public and Private Cloud AI Digital Banking
Sixty-five percent of worldwide banking executives expect that the branch-based model will be "dead" within the next five years
Sixty-five percent of worldwide banking executives expect that the branch-based model will be "dead" within the next five years, according to survey data collected by The Economist Intelligence Unit (EIU) on behalf of Temenos. The result, compiled from interviews of 305 senior global banking executives, is 35% higher than four years ago.
The new data feeds into branch penetration forecasts completed by Insider Intelligence for the UK, the US, and Canada. "Penetration" is defined as bank account holders ages 18+ who visit a bank, credit union, or brokerage branch at least once per year.
- UK: Branch penetration in the country will decline from 65.3% in 2019 to between 60% and 62% in 2024. Temporary branch closures during the pandemic accelerated a trend of UK banks scaling back their physical footprints to rein in operating costs.
- US: Physical bank locations will suffer an even steeper drop in the US, falling from 70.1% in 2019 to 62.3% in 2024. According to an estimate offered by Rob Aulebach, a former retail distribution executive at Bank of America Corp., up to 30% of branches that the pandemic shuttered may never reopen.
- Canada: Branches remain a valuable asset to banks in Canada, but still are expected to drop from 86.5% in 2019 to between 82.6% and 84.5% in 2024. 23% of Canadian consumers say they'll visit branches less often for transactions when the pandemic ends.
See: Economist Spotlight: Imagining a world without banks
As brick-and-mortar locations decline, 81% of the bankers surveyed by the EIU say that banks will seek to differentiate by customer experience, rather than by products. New technologies like the cloud, artificial intelligence (AI), and APIs are the tools that global banking executives plan to use to deliver superior customer experiences.
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