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Banks Can Save $1.5 Billion Through Adoption of Digital Channels, Study Says

A new report by Javelin claims that the banking industry could save $1.5 billion each year by leveraging mobile to further decrease branch transactions.

Banks facing tight budgets have been trying to cut costs in their expensive branch networks for several years now, and one way to do so is to urge customers to use the digital channels for daily transactions. A report released yesterday by Javelin Strategy and Research, called “Leveraging an Omnichannel Approach Financial Institutions Fight for $1.5 Billion in Mobile Banking Profits,” estimated that banks can save almost $50 a year for every customer that deposits one check each month through a mobile device rather than a branch.

That savings would total $1.5 billion a year for the entire industry, the study said.

Javelin said that branch visits have already dropped by 10% since 2010. But there is still room for more savings by limiting branch visits in favor of digital transactions, Mary Monahan, EVP and research director on mobile at Javelin, said in a statement.

[See Related: Mobile Check Deposit Helps Drive Increased Mobile Adoption]

Javelin estimated the cost difference between an in-branch check deposit and a mobile check deposit at $4.15 per deposit, leading to a savings of nearly $50 a year for each customer that moves one check deposit per month to the mobile channel.

The study, based on online surveys of more than 18,000 consumers, includes best practices for encouraging customers to move their daily transactions from the branch to the digital channels.

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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User Rank: Author
7/10/2013 | 2:22:03 AM
re: Banks Can Save $1.5 Billion Through Adoption of Digital Channels, Study Says
I wonder how many organizations will miss the point and focus on the cost savings of scaling back branches without making the necessary investments in digital channels? It also would be interesting to get estimates from Javelin about the potential costs of those investments -- I'm guessing the $1.5 bln in savings number is a bit misleading because some of that savings will go into the new channels and related support services.
User Rank: Author
7/10/2013 | 1:43:16 PM
re: Banks Can Save $1.5 Billion Through Adoption of Digital Channels, Study Says
They definitely are leaving out the upfront costs of implementing the new capabilities in the digital channels that will draw consumers away from the branch. I think that they were wise to choose mobile check deposit as an example because it is an technology that many banks have already adopted, and those that haven't have probably reconciled themselves to the fact that they will need to by now.
User Rank: Apprentice
7/15/2013 | 7:06:59 AM
re: Banks Can Save $1.5 Billion Through Adoption of Digital Channels, Study Says
I believe Gen Y customers not willing to visit the branch for their daily transactions. Its better to move from branches to digital channels, the best example is mobile banking.
Greg MacSweeney
Greg MacSweeney,
User Rank: Author
7/15/2013 | 12:41:10 PM
re: Banks Can Save $1.5 Billion Through Adoption of Digital Channels, Study Says
Unfortunately, banking executives continue to receive mixed messages from customers. Customers rarely use the branch as banks continue to improve digital capabilities. However, customers select their bank based on having easy access to a local branch. So, the directive to a banker is: spend lots of money to build and maintain branches even though your customers will rarely visit them. In turn, as the number of overall transactions goes down in the branch, the cost per transaction creeps up.
User Rank: Author
7/15/2013 | 5:35:17 PM
re: Banks Can Save $1.5 Billion Through Adoption of Digital Channels, Study Says
Many do say that the prime value of a branch nowadays is as a billboard.
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