An increasing number of bank customers are using technology to literally branch out, according to a new Novantas survey. More than a third (up to 35 percent) of U.S. bankers are now “Virtually Domiciled,” and essentially not using branches for their day-to-day banking needs.
Actual branch transactions have been declining at a rate of between 4 percent and 5 percent over the last three years as banks invest in new technology and channel capabilities, including image-enabled ATMs and remote deposit capture on smartphones. The result is a more self-service oriented customer. In 2006, for example, 70 percent of customers visited a branch to deposit funds, the study found. That number is now 54 percent. Six years ago, nearly half (45 percent) used a teller to transfer fund. That has dwindled to 19 percent.
Convenience in banking has traditionally meant more branches, but in the 21st century, it means technological advances that allow customers to bank from anywhere. Fifty three percent of customers—up from 49 percent last year—prefer self-service channels to perform basic transactions.
Not surprisingly, younger people, generally the first adopters of new technology, are showing increased interest in self-service banking. Sixty-four percent of 18-29-year-olds prefer remote banking channels compared to 37 percent of over 55-year-olds.
The survey identifies three types of bank customers. The “Branch Traditionalist,” comprises between 25 percent and 40 percent of the overall banking population and will visit a branch about once a week. They tend to be lower income and dependent on an easily accessible branch. They also are more likely to develop relationships (60 percent believe that knowing someone at the bank will make it easier to resolve an issue).
The “Ultra-Connected,” who comprise between 30 percent and 45 percent of the population, use and prefer their branch for basic transactions, but also utilize technology and remote channels.
These customers skew younger and are often worth between 20 percent and 25 percent more than other bank customers in terms of balances held for deposits and investments.
The “Virtually Domiciled,” who represent between 25 percent and 35 percent of the banking population, are using their local branches less for basic transactions such as deposits and withdrawals. While having a branch nearby is important to them, they put a higher priority on “alternative channels” such as the bank’s webstie and mobile channels.
Millionaire households surveyed in 2011 by Millionaire Corner use their personal computers or laptops most for personal finance. Ninety-three percent use them to access personal information, while 88 percent use them to pay bills. Sixty-one percent use this technology for investment trading. Computer tablets and mobile phones are catching on, with 76 percent and 56 percent, respectively, using them to access account information.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.