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19:18 GMT, December 27, 2019While Millennials aren’t solely responsible for the decline of physical bank branches, their preferences are certainly accelerating the trend. Across the banking spectrum, consumers are gravitating toward virtual banks and traditional banks that have heavily invested in mobile and online banking services.
According to a study by Business Insider Intelligence, Millennials are increasingly abandoning traditional bank branches. As the largest generational group in the U.S. workforce, representing 34% of the working population and 26% of the overall population, their banking habits are having a profound impact on the future of the industry.
The study reveals that nearly three-quarters of all Millennials visit bank branches once a month or less, and when they do, it’s often just to use the ATM attached to the branch. In fact, 38% of Millennials either never visit bank branches or only do so to access the ATM. This shift in behavior is driving the banking industry to develop new technologies, making physical bank branches increasingly obsolete.
Are Bank Branches Doomed?
The future of bank branches looks bleak as younger generations continue to favor virtual banking. As older generations retire and Millennials, along with Gen Z, become the primary consumers of banking services, the demand for physical branches is expected to dwindle.
Mobile devices have already become the preferred method for banking, and as banking apps continue to advance in sophistication and functionality, the need for physical bank branches will diminish. The rise of AI-supported virtual banking and other yet-to-be-seen technological developments will further reduce the necessity of physical branches and the human tellers who work there. Eventually, maintaining these branches may no longer be financially viable for banks.
The Decline of ATMs
As cash transactions and check payments decline in favor of digital payments, the need for ATMs will also decrease. The popularity of digital payment services like Venmo, Apple Pay, and others is rapidly growing, making it easier for consumers to handle their financial transactions entirely through their mobile devices.
The decline of ATMs will likely follow the same path as bank branches. As mobile banking becomes the norm, the concept of a “virtual bank” will eventually become redundant. These banks will simply be known as “banks,” reflecting their status as the standard in the industry.
Conclusion: The Changing Face of Banking
The banking industry is undergoing a significant transformation, driven in large part by the preferences of Millennials. While it’s not fair to place the blame solely on this generation, their shift toward digital banking is hastening the decline of traditional bank branches and ATMs. As technology continues to evolve, the future of banking will likely be entirely digital, reshaping how we think about financial services.
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