Large national banks are aggressively moving into mobile banking service, which means less of a need for branches and bank tellers.
Customer service reps at US bank branches are falling victim to mobile consumer platforms — a development that imperils the careers of friendly, old-fashioned tellers with new alternative no-frills robotic service and come-on discounts.
US banks, citing their huge online growth, shuttered a record number of branches last year — net closings of almost 1,600 nationwide, 120 of them in the tri-state area alone, according to SNL Financial.
And the next five-years may see an acceleration in closings, according to a forthcoming report by Aite Group analyst David Albertazzi. He estimates net branch reductions of nearly 7 percent by 2019 — meaning the closing of some 88,000 physical branches. That, he reckons, could translate into 142,000 mostly middle-class bank-job losses — predominantly tellers.
Bank of America is at the forefront of this digital revolution, reducing its branch number by 171 last year. Other big names: Citigroup had net closings of 77 in 2014; JPMorgan Chase lost 15 branches. BofA today has just over 5,100 branches. But that’s down from over 6,000 five years ago.
In a frank admission, BofA CEO Brian Moynihan last month praised the cost saving role of mobile banking that’s behind the trend.
“You can see that we’ve developed up to 16 million-plus customers. That’s 2 million more than when I was here last year, and we added 30,000-plus last week,” Moynihan said.
“What’s put into digital banking can provide significant return on investment,” said Ed O’Brien of Mercator Advisory Group, citing that a teller visit costs a bank about $4. The same transaction online can be as low as 25 cents.
BofA is ratcheting up the savings. The bank says its mobile “active” bank accounts surged by 15 percent last year to some 16.5 million from 14.4 million in 2013.
BofA has plenty of company. Wells Fargo of San Francisco reported nearly 25 million active online customers last year, up 8 percent year-over-year. It had just over 14 million active mobile customers, a jump of 19 percent. Last year, it reduced its total branch network by 16.
SNL Financial analysts note the added burden of high costs and legal expenses is pushing banks to shutter expensive legacy branches.
Moynihan says technology is critical to success.
“The key is, how do you optimize all that cost structure, especially the mass market? And you can see we’ve made great progress in that area,” he said.