Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Why Bank of America May Not Leave Your Neighborhood

Think bank branches are going the way of the dodo bird? Two executives at Bank of America (NYSE: BAC  ) and Citigroup (NYSE: C  ) want you to think again.

Source: Flickr / nitram242. 

The hastening change
Many have suggested bank branches and the way individuals interact with their banks are ripe for major change. After all, Pew Research found last year 61% of individuals who use the Internet regularly use it for banking purposes. This is a staggering shift from the 18% seen in 2000. 

Countless people have noted the ballooning number of online and mobile banking users at the biggest banks -- consider Bank of America's mobile users climbed nearly 60% over the last two years -- is further evidence of the shifting dynamics between banks and their customers as a result of technological change.

Source: Company Investor Relations

Yet surprisingly, in two separate interviews, the managers of the retail and branch arms of two of the largest banks have suggested notion of bank branches become extinct is actually false.

Expert opinion
In an op-ed article for American Banker entitled "Consumers Want Multiple Ways to Bank," Bank of America's ATM Channel and Retail Distribution Executive, Rob Aulebach, acknowledged the technological change facing banks, but refuted its ultimate impact, noting: 

Simply put, mobile apps and the ATM are rapidly becoming alternative touch points for many customers. But does that mean that bank branches are dinosaurs? The answer is definitely "no."

The same guidance was true from the chief operating officer of the U.S. consumer and commercial businesses at Citigroup. In a separate interview at American Banker's Retail Banking 2014 conference, William Howle didn't outline exact changes Citi would undertake, but when asked about the bank's branches he said, "the number will not change drastically; the composition will change." 

The banks are becoming more open to changing the way they interact with their customers. Banks are seeking to shift the way banks are crafted, whether it involves reducing the size, or increasing the different capabilities, in an effort to meet the distinct needs of each and every customer.

Helpful changes
Howle at Citigroup noted part of the shifts in the composition would likely involve three differently sized branches, ranging from "mini" branches between 50 and 500 square feet to its "full-service," branches which were at least 2,500 square feet. The same dynamics were true of Aulebach at Bank of America, who noted the bank has launched its "express banking center," which offers traditional services, but also includes its "ATMs with Teller Assist" that allows individuals to access a teller through an ATM when no in-person help is available.

Importantly each executive noted their banks were not approaching the changes with a cookie-cutter or one-size-fits-all approach. Instead, they will make the decisions on what to do with the branches based on the broader dynamics of the surrounding areas of the branches. It would make sense a customer in Midtown Manhattan would have different desires for the services, hours, and capabilities provided by their bank than a customer elsewhere in the United States.

Why it matters to investors
Americans are becoming more comfortable with using technology to do banking activities, but Aulebach highlighted more than 85% of the purchases of financial products at Bank of America are done in a branch.

This is one of the reasons Aulebach said "we are adapting our banking center network to meet the changing habits and needs of our customers," by doing things like equipping employees with tablets at more than 1,200 of its 5,151 banking centers.

It has long been recognized across industries that those firms who do the best job of recognizing the changing needs and desires of their customers will ultimately be the ones met with success in their business and bottom line. If banks are in turn able to meet customers in ways that lead to higher sales at lower costs -- after all, smaller branches are assuredly less expensive to operate -- it will mean big things to both them, and their investors.

How to profit from these shifts
While the banks like Bank of America and Citigroup may still take the lead, there is no denying change will occur in the business model of the banking. And this shift certainly creates opportunity for savvy investors. In fact there's brand-new company that's revolutionizing banking, and amazingly, despite its rapid growth, this company is still flying under the radar of Wall Street. For the name and details on this company, click here to access our new special free report.

Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2878828, ~/Articles/ArticleHandler.aspx, 9/1/2015 8:30:08 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Patrick Morris

After a few stints in banking and corporate finance, Patrick joined the Motley Fool as a writer covering the financial sector. He's scaled back his everyday writing a bit, but he's always happy to opine on the latest headline news surrounding Berkshire Hathaway, Warren Buffett and all things personal finance.

Today's Market

updated 11 hours ago Sponsored by:
DOW 16,528.03 -114.98 -0.69%
S&P 500 1,972.18 -16.69 -0.84%
NASD 4,776.51 -51.82 -1.07%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/31/2015 4:00 PM
BAC $16.34 Down -0.02 -0.12%
Bank of America CAPS Rating: ****
C $53.48 Up +0.20 +0.38%
Citigroup Inc CAPS Rating: ***