JC Lupis | Marketing Charts | Fri, 13 May 2016 13:00:08 +0000

Almost half of banking executives plan to increase their brick-and-mortar branches, versus fewer than one-fifth who plan to decrease them, per a recent KPMG study [pdf]. The study is based on a survey of 100 banking respondents, including senior executives at 70 of the largest banks in the US, holding nearly 80% of all banking assets in the US banking system.KPMG-US-Bank-Physical-Location-Expansion-Plans-May2016

Smaller banks are more aggressive in their brick-and-mortar expansion plans than larger banks. For example, fully 71% of banks with $50-250 billion in assets expect to increase their branches, including 21% who will be increasing them by more than 10%.

These expansions may be necessary to satisfy Millennial customers. A new study from MarketingCharts finds that branch locations are the top reason why Millennials choose a primary bank, which may explain separate data contained in the report showing that they gravitate to the big 3 banks at a greater rate than older consumers.

For the largest banks in the KPMG report, brick-and-mortar expansion isn’t as great a priority. In fact, in contrast to the smaller banks, they’re more likely to say they’ll decrease (31%) than increase (24%) their branches. The analysts note that “since larger banks are spending far more on digital channels, such findings suggest that they are looking for a return on their digital investments over branch expansion.”

Separately, the report finds that the top growth driver for banks is developing and selling new capabilities for investment services, with fewer entering the prepaid card business that has proven fruitful in attracting youth.

Other highlights from the study include:

  • Almost 3 in 4 executives ranking their organization’s digital banking capability (such as mobile bill pay, mobile deposit) as a 7 or higher on a 10-point scale;
  • 7 in 10 rating their ability to create and deploy banking apps customers want to use as a 7 or higher on the same scale;
  • Some 39% agreeing that they and their bank colleagues consider fintechs a significant threat to their industry in the next few years; even as;
  • A slight majority (51%) have already created a strategic alignment or joint venture with a peer-to-peer or marketplace lender for the purpose of creating consumer or business loans.

For a comprehensive look at marketing financial services to Millennials, see MarketingCharts’ new report, available here.

About the Data: KPMG’s 2016 Banking Industry Outlook Survey is based on a survey of 100 US banking executives, including senior executives at 70 of the largest banks in the US, which hold nearly 80% of all banking assets in the US banking system.