Garnet Capital Advisors Blog

Excerpt: Many bank executives believe that consumers may be on the brink of forgoing traditional brick and mortar branches. Read on to learn more.

Could traditional bank branches soon be a thing of the past?

It's no secret that the banking industry has faced challenges as digital technology has become more prevalent. And banks are sitting up and taking notice by investing in digital banking. For many retail banks, online and mobile platforms have become just as important as physical branches.

Consumers across the country expect their banks to serve their increasingly digital needs, and many are turning exclusively to fintech services to streamline banking. Many banks have already been on the path to digitizing their services and helping ensure that they're able to provide the same level of convenience that their customers expect.

But could this mean an eventual extinction of conventional brick and mortar bank branches? Some banking executives think so, and they are taking steps to prepare for a fully digital banking world.

According to a recent article in The Wall Street Journal, Citigroup has already been minimizing its physical branches in favor of 'branchless" services, and its efforts seem to be working for the banking giant.  

The bank's executives believe that consumers across the nation are ready to ditch bank branches altogether and rely solely on digital banking. And the numbers support this; the bank added approximately $1 billion in digital deposits over Q1 2019, which is more than it did over all of 2018. And over half of that amount came from customers who live far away from Citigroup branches, and as much as two-thirds was derived from new customers brought aboard.

These days, Citigroup has created several programs influenced by today's digital age. Most recently, the banking giant developed a new account through its mobile app for credit card customers and innovative mobile banking offers.

Citigroup executives are focusing more on their digital offerings than spending money on physical bank branches. 

At the end of the day, Citigroup is focusing more of its money on improving its digital platform instead of plunking down hundreds of millions of dollars in physical branches.

And other big banks are following suit, albeit while maintaining their branch networks.

Banks have already been in stiff competition with rapidly-emerging FinTech firms. And instead of continuing the fight, traditional banks have embraced digital technology and even partnered with FinTechs in many cases.

Financial institutions that operate on a digital platform rather than relying on traditional brick and mortar branches can realize lower overall costs and more streamlined processes. In turn, this can help enhance the customer experience and leave space for other potential transformations in the digital space.

The world of banking is changing, both for consumers and the banks themselves. Amid an ever-changing environment, it's more important than ever for financial institutions to take a look at their loan portfolios regularly and ensure that their assets are as profitable as they can be.

At Garnet Capital, we can work alongside your firm to help sell off risky assets to make room for those that are more likely to outperform.  Sign up for our newsletter today.