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Quarter-End Insights

Financial Services: Bank Branches Under Siege

The rapid increase of online and mobile banking is streamlining transactions, reducing costs, and making the traditional bank branch a relic of an earlier era.

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  • The role of the physical bank branch and its future as the primary delivery channel of products and services is facing change. Banks have been forced to re-examine their branch networks and their functionality in the face of macro-economic forces such as low interest rate spreads, Federal Reserve stimulus actions, and higher regulatory costs. Accordingly, digital efforts will be the biggest driver in changing how branch banking looks for the next 20 years.
  • Smart phones and cost savings are the key drivers. The increase in smartphone penetration and the cost savings available with new technologies have placed tremendous pressure on the banks to make changes to their branch networks.
  • European banks report large losses and CoCo bonds look iffy. The Royal Bank of Scotland and Unicredit reported multibillion dollar losses indicating that European troubles still are ongoing, and the growing popularity of CoCo, or contingent convertible, bonds has us concerned.


Stephen Ellis does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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