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Branch of the Future – The Traditional Office Will Be in the Mix

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BY MEREDITH DEEN

Forget what you’ve heard about the future of the credit union branch. All those space-agey predictions are not likely to come to fruition. In fact, the traditional office branch will be here for a long time to come, but it will be part of an individually tailored and dynamically mixed approach rather than one-size-fit-all. Here’s how that might look.

Many interesting branch designs have emerged in the last few years to address consumers’ shifting financial needs – teller-less offices and retail-focused spaces resembling an Apple Store more than a bank or credit union, to name only two.

Branches are changing and with good reason: their transaction numbers are steadily falling as consumers perceive offices less necessary for their daily needs but important for in-depth product conversations and financial advice.

Amid the change we’ve seen predictions that the branch of the future – all of the FI locations across the U.S. – will someday look like something out of “The Jetsons.” But those forecasts won’t likely come true.Branch banking data actually indicates there will always be a place for the traditional office, alongside new branch designs,as the financial marketplace evolves.

Yes, branches have experienced a 45 percent decline in transaction volume since 1991, according to FMSI’s Teller Line Study. The number of branches in the U.S.has also declined by 4.8 percent since 2009,says the FDIC. And mobile banking is advancing quickly – much faster than Internet banking originally caught on.

So does that signal that branches, especially the traditional office, are quickly going the way of the typewriter? No.

The ratio of population to branches has declined from 9,340 in 1970 to 2,970 in 2014. This staggering metric is a result from a nearly 300 percent growth in the number of branches since 1970, while the population growth was nearly half of that.

Coupling the decline in the ratio of population to branches and the recent decline in bank branches suggests that the market is starting to correct itself. It is going from being “over branched” and not shutting down branches when branch functionality became dated to being branch balanced.

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