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U.S. bank customers like electronic channels, but want branches too

An interactive sales wall is seen at Citi's new flagship branch at Union Square in New York, December 16, 2010. REUTERS/Shannon Stapleton

NEW YORK (Reuters) - U.S. bank customers are quickly turning to mobile devices and computers to deposit checks and borrow money for cars and houses even as they say banks should keep branch offices open, according to a new study.

Some 32 percent of U.S. bank customers use mobile banking at least once a month, half-again as many as last year, consulting firm Accenture said in a survey released on Tuesday. Of those who took out a car loan, 21 percent did so online, double the portion the year before. Twenty-five percent went online for a home mortgage, up from 15 percent.

The shifts came even as almost four out of five people said they will visit bank branch offices just as frequently, if not more so, five years from now.

Branch closings would be inconvenient, two-thirds said. Half said they would switch banks because of a branch closing.

Having people want more digital banking and branches too, means trouble for bank executives, said Michael Goodson, an Accenture managing director for financial services.

"There is a risk of moving too slowly and a risk of moving too quickly, in terms of alienating customers," Goodson said. Accenture found that customers feel little loyalty to banks and would likely switch to a more appealing competitor if they thought the change would not be difficult.

Branch real estate and staff cost the top 25 U.S. banks about $50 billion a year more than including information technology, call centers or other operating expenses, according to Accenture. Processing deposits digitally can cost 95 percent less than using human tellers.

Gordon Smith, chief executive for consumer banking at JPMorgan Chase & Co, said at an investor conference last week that the company is adding about 100 branches a year to its network of 5,652, up 7 percent from 2010 and second in size only to Wells Fargo & Co's 6,217 locations. Branches continue to attract customers and deposits, Smith said.

Still, JPMorgan's pace of building is one-third its former rate and the new branches are smaller and have 20 percent fewer employees. Bank of America has reduced its count by 10 percent since 2010 to 5,243.

Full-service banks could lose as much as 35 percent of their market share to more digitally-adept peers and newcomers by 2020, said Wayne Busch, head of Accenture's banking practice in North America.

The companies that take customers, Busch said, could include banks that are online only and retailers that partner with financial institutions. An example of that type of venture happened when Wal-Mart Stores Inc teamed up with American Express Co to offer a prepaid debit card in lieu of checking accounts.

(Reporting by David Henry and Peter Rudegeair in New York)

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