The rise of Fintech has posed a serious threat to the traditional branch banking model. Neobanks and other online financial services companies are able to avoid the costs of running and staffing physical branches, and they can pass those savings on to their customers.
A new study by Bankrate, however, indicates that the branch model will not be going away anytime soon. When Americans were asked when they last visited a bank branch, nearly half (45 percent) of respondents said within the past month. In addition, more than a fourth (26 percent) said they had visited a bank branch in the past week. These visits even exclude use of ATMs.
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The Fintech revolution has reportedly been driven by a younger, more tech-savvy Millennial generation, but Bankrate found that Millennials are using bank branches nearly as much as the rest of the population. In fact, more than 40 percent of Millennials reported visiting a bank branch within 30 days.
The last piece of good news for traditional banks is that use of branches rises along with income. Households with the highest income were most likely to have visited a bank branch within a month, while those making less than $30,000 per year were the least likely branch users.
The survey is some much-needed good news for the banks that operate the most number of U.S. branches, including Wells Fargo & Co (NYSE: WFC), JPMorgan Chase & Co (NYSE: JPM) and Bank of America Corp (NYSE: BAC).
Disclosure: The author is long BAC.
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