The Banks of the future, will bank branches become obsolete?

Millennials are increasingly turning to digital banking channels to perform their banking activities, and they're visiting their banks' branches less often than ever before. The behaviors and preferences of this generation which makes up the largest share of both the population and the employed population will shape the future of the bank, as well as the relationship between the bank and the customer.


The bank branch will become obsolete. It will be some time before the final death rattle, but improving online channels, declining branch visits, and the rising cost per transaction at branches are collectively leading to branch closures.

Banks that don't act fast are going to lose relationships with customers. Consumers are increasingly opting for digital banking services. This is disrupting the relationships between banks and their customers, and banks are losing out on branding and cross-selling opportunities. For many banks, this will require further commercialization of their products and services.

The ATM will go the way of the phone booth. Relatively low operational costs compared to bank branches, paired with customers' preference for in-network ATMs, makes the ATM an attractive substitute for bank tellers. But as cash and check transactions decline, the ATM will become nonessential, ultimately facing the same fate as the physical branch.

The smartphone will become the foundational banking channel. As the primary computing device, the smartphone has the potential to know much more about banks' customers than human advisers do. The smartphone goes everywhere its user goes, has the ability to collect user data, and is already used for making purchases. Therefore, the banks that will endure will be those that offer banking services optimized for the smartphone.