Technology has changed the relationship between banks and their customers, a change resulting in the decline in the number of bank branches per capita worldwide.
Customers are increasingly using digital and mobile services to meet their banking needs. And that means that consumer banks in the United States and Europe “are at a tipping point in terms of branch distribution,” says a report released March 29 by Citigroup, the global financial services company.
Northern Europe has cut total branches by about 50 percent, says the report, “Digital Disruption: How FinTech is Forcing Banking to a Tipping Point.”
“The U.S. banks have up to now lagged their Nordic and European peers on branch reductions. But with the increased ubiquity of the mobile Internet, increasing FinTech competition, and a sluggish revenue and profitability environment, we expect U.S. banks to follow their EU peers in cutting branches,” the report says.
It quotes Antony Jenkins, the former CEO of Barclays, who has said that banks are at an “Uber moment.” Jenkins says “that pressure from new technology-based competitors ‘will compel banks to significantly automate their business’ and ‘that the number of branches and people may decline by as much as 50% over the next years.’”
Sources: World Bank, Citi Research