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Bank of America Will Close More Branches With Increasing Mobile Usage

Increasing mobile adoption has Bank of America planning to cut more branches this year, after closing more than 300 last year.

Bank of America saw its number of mobile banking customers increase by 20% in 2013 to 14.4 million, the bank said in its Q4 earnings report, which was released yesterday. The bank has invested nearly $500 million in its mobile channel, Bank of America CEO Brian Moynihan said in a subsequent earnings call, according to media reports.

[For More on This Topic, “Branch Closures Outpace Openings by Nearly 1,000 Over Last 12 Months”]

Although the investment seems to be working in increasing mobile adoption, it seems as though it will spell bad news for the bank’s branch network. More check deposits at Bank of America are moving to the mobile channel, with mobile check deposits increasing to 9% of all checks deposited at the bank last quarter, up from 7% the previous quarter.

The bank will close more branches in 2014, CFO Bruce Thompson said during the call, after reducing its number of branches in 2013 from 5,478 to 5,151. Thompson said the bank’s branch network could fall below 5,000 total branches in 2014.

Jonathan Camhi has been an associate editor with Bank Systems & Technology since 2012. He previously worked as a freelance journalist in New York City covering politics, health and immigration, and has a master's degree from the City University of New York's Graduate School ... View Full Bio

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Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
1/16/2014 | 10:02:04 PM
re: Bank of America Will Close More Branches With Increasing Mobile Usage
I think that some of the re-formatting around branch design might come in there. A lot of banks are reducing the actual size of branches to help cut costs. What we used to think of a bank branch, the large regal structure with pillars and lots of wide open floor space, that can't be supported any more. Customers are going to have to get used to a different kind of branch. But long term regulators are going to have to start assessing the value of self-service kiosks and digital tellers.
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
1/16/2014 | 9:58:03 PM
re: Bank of America Will Close More Branches With Increasing Mobile Usage
Yeah yesterday Chase, which actually has been expanding its branch network, scrapped its plans to build some new branches this year. Everyone is having to pull back and rethink their business models because of this trend.
marous
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marous,
User Rank: Apprentice
1/16/2014 | 6:55:24 PM
re: Bank of America Will Close More Branches With Increasing Mobile Usage
Even more interesting is the determination of what branches to close. The dilemma banks face is that the branches that once were profitable due to fees and transactions are no longer supporting the same level of traffic. Many of these branches are in CRA areas where the government may step in regarding service levels.

How does a bank close a branch they should close but may not be allowed to close. On top of that, the regulators have also had a negative reaction to changes in type of service for these branches. In other words, banks may not be able to convert some of these offices to digital tellers even though research would support this type of service.
KBurger
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KBurger,
User Rank: Author
1/16/2014 | 6:30:37 PM
re: Bank of America Will Close More Branches With Increasing Mobile Usage
I wonder if banks such as BofA, which are experiencing success/growth in the mobile channel and a directly related declining role for the branch, will start to apply new capabilities around channel analysis to not just identify under-performing branches but to perhaps shift branch locations strategically to better serve customers who are heavy branch users and unlikely to rely much on mobile/online -- for example, in areas with a significant older customer population. I could foresee a branch designed to serve primarily senior citizens (really big fonts on signage, 50s-60s music, etc.), for example.Banks are rethinking branches around function, maybe they have to rethink them around demographic segment, too.
Nathan Golia
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Nathan Golia,
User Rank: Author
1/16/2014 | 6:04:59 PM
re: Bank of America Will Close More Branches With Increasing Mobile Usage
Brick and mortar is struggling across industries, as this news comes out the same day JC Penney announces more store closings. We're all adapting to an increasingly automated/self-service world.
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