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Brand expansion through branchless banking

March 21, 2013 by Rebecca Hellmann — Marketing and Sales Coordinator, Welch ATM

While transactions at financial institution branches across the U.S. are dropping by approximately 5 percent per year, PC and Internet use are on the rise. The trend toward nationwide and even global connectivity is providing a unique opportunity for FIs to reach new markets and drive services from declining bank branches directly into the homes and hands of customers.

Conventional banking channels are reaching inherent limits while increased access to Internet and mobile are making banking from home far more attractive for consumers. A 2010 survey by the American Banking Association found that 36 percent of bank customers preferred to do their banking online.

In 2009, Wall Street Journal Market Watch reported that Bank of America had decided to close 10 percent of its branches in the U.S, citing consumer preference for new channels such as Internet and mobile. BofA is just one of many financial institutions to close doors on branch locations over the years.

The movement of consumers toward Internet and mobile banking offers opportunities for banks and credit unions to expand their brands in new and relatively inexpensive ways. Transferring products and services to an online and mobile-friendly platform can save time and money while increasing online presence, allowing a reduction in branch locations and hours that can lower overall costs.

As of 2005, branchless banks held about 1 percent of all U.S. deposits and almost 2 percent of deposits under $100k, according to the FDIC. These branchless institutions survive by providing robust Internet and mobile applications, direct deposit, check imaging, 24/7 customer service, ATM fee reimbursement or extensive surcharge-free ATM access through networks such as MoneyPass or a self-branded network. This new and fast-growing system has great appeal to high-profile markets such as young adults, early adopters, entrepreneurs and the underbanked.

"In the next few years things will change just as they did for Blockbuster," said Louis Camassa, vice president of web services at TechXpress.net. "They were a big presence; now people watch movies online. I thing banks will go in the same direction."

Rural banks and credit unions that have yet to feel the pinch of flagging branch visits and don't have a business case for migrating to an entirely online presence might consider simply adding digital services to appeal to mobile- and online-oriented customers.

Increasing ATM availability through retail placements and surcharge-free networks; advertising products and services online and facilitating online application for them; providing a mobile website or app: These are just a few steps toward brand success beyond of the branch.

About Rebecca Hellmann

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