Rory Brown, Managing Partner of Nicklaus Brown & Co., On Virtual Banks Causing Bank Branch Extinction

Millennials are killing off everything the world holds dear, from marriage to casual dining to cable TV. Of course, no one generation is to blame for all the changes we see in the world. Still, the behavior of Millennials is contributing dramatically to the likely demise of one longstanding institution — the brick and mortar bank branch. Rory Brown, Managing Partner of Nicklaus Brown & Co., discusses how the mounting reliance on virtual banks is dooming these locations to extinction.

Virtual bank image 4993994993eeeAre Millennials to Blame?

They aren’t solely to blame. Consumers across the banking spectrum are moving to virtual banks and conventional banks that have invested heavily in mobile and online banking.

According to a study published by Business Insider Intelligence, Millennials are abandoning branch banking in record numbers.  Millennials represent 34% of the working population in the U.S. and 26% of the country’s population as a whole. Their behavior will, in large part, decide the fate of the bank branch.

According to BI Intelligence, just under three-quarters of all Millennials visit bank branches once a month or less. And some of these aren’t actually visiting the branch to use the services offered but are instead just looking for quick access to the attached ATM.

A full 38% of Millennials either never visit bank branches or only visit for the attached ATM.  The banking industry is responding with new technologies that make bank branches increasingly obsolete.

Millennials image for article 3992991994993992
Millennials were born from the early 1980s to about the year 2000. Image created by Market Business News (Copyright ©).

Are Bank Branches Doomed?

Bank branches will be phased out in the coming decades as older Americans retire, and younger generations continue to use virtual banks. Mobile devices are already the preferred banking method for a considerable portion of the population, and apps will continue to grow in sophistication and functionality.

As AI-supported virtual banking comes online, along with developments we can’t yet predict, the necessity of physical branches, as well as the human tellers they house, will no longer be useful, or financially viable.

After Bank Branches Die, ATMs Will Shortly Follow

Cash itself is gradually losing relevance, as are check payments.  Digital transactions become the preferred method of payment, both for commercial purchases and person to person transfers. Services like Venmo and Apple Pay are accelerating.

The demise of the ATM is sure to follow the path of branch banking. People will use their mobile devices to satisfy all of their banking and payment needs. At that point, the term “virtual bank” will cease to make sense. We’ll just call them “banks” because they will be the status quo.

About: Mr. Rory Brown has focused on financial technology and investment management for 30+ years. Rory Brown Co-Founded one of the world’s first Virtual Banks and writes extensively about the industry.

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