Branch closures result in customer losses according to a recent survey by SYNERGISTICS Research entitled, Branches in a Digital Age. In response to branch closures during the past year, three in ten (30%) of those whose branch closed moved their accounts to another institution (Exhibit 1). Furthermore, close to three in ten (28%) branch users report they would switch financial institutions if their current branch closed (Exhibit 2).
Overall about one-tenth (11%) of Internet households say that a branch they regularly used closed in the past year. In addition to those who switched institutions due to a branch closure, a significant number (32%) started to use a branch that was less convenient (Exhibit 1). More than one-quarter of those whose branch closed say it was probably a necessary action on the institution’s part to cut costs (27%), while a similar number just stopped using branches (27%). One-quarter say the branch closure gave them a generally negative impression of the institution (25%), made them uneasy about the safety of their money (25%), or did not give it much thought (23%).
Genie M. Driskill, COO of SYNERGISTICS, stated, ‘In the current environment, depository institutions are struggling to balance the need for cost reductions with providing customers with quality service and offering financial advice and consultation. At the center of this dilemma is the customer experience at the branch. For many consumers, the branch is the bank. Providers will need to carefully evaluate the cost savings of closing branches. As these results indicate, while many consumers will find some alternative method of coping with a branch closure, a sizeable number have or would switch providers in response. Providers planning to reduce their branch networks should anticipate a degree of customer loss.”
These are among the findings from SYNERGISTICS study, Branches in a Digital Age, featuring 1,003 online interviews with consumers age 18 or older. This study evaluates branch usage patterns, improvements and innovations, as well as the role of branches going forward. It will assist providers in identifying strategies for positioning, redesigning and configuring branches from the consumer perspective.
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