As more and more customers migrate to digital channels, banks have begun investing in mobile solutions with a focus on online and mobile banking. The convenience of smartphones means that customers are increasingly comfortable banking on the go, especially with how time-consuming branch visits are. But what does this mean for physical bank branches? Will they disappear altogether, or will customers see a new, innovative bank branch of the future?

Online and Mobile Banking: The Demise of the Branch?

Some industry analysts continually predict the demise of the physical bank branch, along with cash and ATMs. But while such claims attract headlines, many feel the future is more likely to be in omnichannel customer communication, merging information generated from online, mobile, phone and branch interactions.

A 2015 survey of consumers by JP Morgan Chase found that while consumers want digital channels, including online and mobile banking, they continue to utilize and express a preference for being able to access other physical channels, such as branches. Chase’s research revealed that mobile banking is increasing, with 33 percent of consumers using mobile banking apps more. However, the branch is not going away anytime soon, with 16 percent of consumers making more visits in the last year.

“This survey tells us what our customers have shown us over the last two years,” said Barry Sommers, CEO of Chase Consumer Banking. “They love the ease of handling their routine banking online, on their phone and at an ATM.” Consumers are looking for omnichannel solutions that provide the ability to do routine business with low levels of interaction. High-interaction channels are reserved for more complex conversations and transactions.

A new bank that launched in 2015, BankMobile, is trying to disrupt these mobile-branch hybrid preferences by making those high-touch transactions easier for mobile devices. The institution has no branches and limits customers’ account access to mobile and online only, and with good reason. American Banker reports that customers can sign up for new accounts within five minutes by snapping a photograph of their identification, a speedy alternative to branch visits. Customers who set up direct deposit to their BankMobile accounts will also qualify for VIP status, which provides free access to the institution’s team of financial advisers. According to Jay Sidhu, chief executive and chairman of BankMobile, people don’t necessarily prefer banks for high-maintenance, complex transactions such as opening accounts; rather, they’ve never had any other choice. This could position mobile as the bank branch of the future, but for now, financial institutions have to serve the current demand.

The New, Slimmer Bank Branch

With current consumer demand trending toward omnichannel transactions, banks need to create a branch that easily interfaces with and complements its mobile and online counterparts. According to Debby Hopkins, head of Citi Ventures, whose team is charged with bringing innovation to Citibank, the future of U.S. branch banking is in fewer but more multifunctional digital banking centers in key markets. Previously, American banking was about the size of the branch network, with offshoots in nearly every town and city nationwide. Now, however, Citi’s U.S. footprint is starting to look more like its overseas units, which have fewer branches and expect customers to carry out any routine transactions online.

As mobility forces banks to cut down on the number of brick-and-mortar locations, the branches themselves are becoming leaner. The New York Times reported that banks such as Bank of America are overhauling their locations into more open spaces, where employees will walk the floor and tend to customers with tablets. Wells Fargo is embracing a similar concept with their “minibranches,” according to American Banker, which contain a mix of mobile-equipped employees, self-service kiosks, and small, private rooms in case customers need to conduct sensitive transactions.

Many banks fear that a mobile future without branches leads to significant security problems, especially with large, private transactions. However, banks moving in this direction are implementing biometrics to help protect customers’ data. Chase recently implemented a feature where consumers can use their fingerprints to access mobile banking applications without a password. Smartphones equipped with biometric capabilities, such as the Samsung Galaxy S® 6, will safely help mobile become the much awaited bank branch of the future.

Mobility will take over banking on both the user end and in branches. While some consumers still want the secure feeling of dealing with a traditional branch, others will gradually start to adopt mobile transactions as they become easier. Financial institutions can prepare for the mobile future by slimming out their branches and implementing mobile and self-service solutions. From there, banks can expect revolutionary changes as digital channels take over.

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Michael Halloran

Michael Halloran publishes the FinTech Blog on innovation and trends in financial services firms and startups, and is head of partnerships and business development at Previously, he was with Morgan Stanley, where he managed partner relationships in the wealth management division. He began his career as a consultant at Gemini Consulting, where he helped launch the U.K.'s first online bank. He was also a managing director at Scient (now Razorfish). Follow him on Twitter: @fintechblogger

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