NEW YORK (3/22/12)--As many as 35% of U.S. banking customers have gone 'virtual' and are no longer using branches for day-to-day financial transactions, according to a new study by consulting firm Novantas.
The New York-based consulting firm said consumers prefer non-branch channels for a range of transactions, from deposits, to solving service problems.
"The rise of virtually domiciled customers at banks is both a huge challenge and an opportunity for the industry," said Novantas partner Kevin Travis, one of the study's authors. For traditional financial institutions, these customers "are an untapped source of cross-sales, but they are also great targets for new entrant and direct players, from internet-only banks, to wealth managers and credit unions."
The findings, based on a survey of 3,500 respondents, were presented Wednesday at a Community Bankers Association Live 2012 conference.
The changes in banking channels mean branch volumes will fall by as much as 20% in certain transaction categories, said Darryl Demos, Novantas partner and an expert in sales and service staffing and processes. With fewer customers walking in the door, banks face a sales crisis, with fewer "at-bat" opportunities to acquire new business, he added. "Banks could count on a 'if you build it, they will come' model working in most markets. Today, that's over. Returns on sales force investments are likely negative for the industry and may not be coming back," said Demos.
Novantas said the findings also indicated that banks are continuing to invest in technology that improves consumers' daily lives by giving them time they normally would spend standing in line at a branch.