US bank clients still prefer brick- and-mortar visits
DESPITE banks' nudging towards online tools, many United States 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 6 per cent since it peaked in 2009, according to Federal Deposit Insurance (FDIC) data. The 93,283 branches at end- last year was the lowest 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.
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.
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.
The traditional branch costs roughly US$2 million (S$2.7 million) to US$4 million to set up and US$200,000 to US$400,000 per year to operate, according to Ed O'Brien, an analyst at Mercator Advisory Group.