In the most recent edition of the ABA Banking Journal, there is a sobering article about all of the bank branch closings over the last couple of years (Time to close under-performing branches).
Over 2,300 offices have been closed to date and many more are in the process.
Much of this is caused by in-branch transaction volumes dropping by 10% annually in many institutions. As a result, banks of all sizes are now looking at their networks for opportunities to reduce expenses.
And with the potential impact of Basel III capital requirements, bankers will be paying more attention to underperforming branches since these requirements cause more capital to be allocated to individual branches.
The article goes into great detail on how banks should evaluate the profitability contribution of each of its branches. It even suggests five steps bankers should take prior to implementing a closure.
But before you contemplate a closure, I would like to offer a suggestion. Have you ever wondered why McDonald’s offers free wifi in 12,000 of its U.S. locations? Or why Starbucks offers free wifi in its 7,000 locations?
Could it be that free wifi attracts customers?
Every time I’ve gone into a Starbuck’s there is more business being conducted there than in most business complexes or executive suites. A lot of small businesses use their local Starbucks as a convenient meeting room. There are thousands of job interviews and research projects done in Starbucks every day.
Research has shown that a third of all households with an annual income of less than $30,000 still don’t have broadband access. With so much of education today involving research on the internet, federal regulators indentified the gap in home internet access as a key challenge for education.
I hear repeatedly from bankers all over the country that they would never consider providing public access to wifi in the branches because of security concerns.
Wouldn’t you think McDonald’s and Starbucks and thousands of other businesses that offer free wifi would be equally concerned about security? There are very inexpensive ways for financial institutions to offer secure wifi.
Many banks already promote free coffee and cookies. Think about what would happen if they started promoting free wifi as well. With millions of small business owners working from home now, a bank branch could offer a number of valuable benefits to them: a place to network, a quiet place to work, free internet access and possibly a small business loan!
They could even offer up an infrequently used board room or an empty loan officer’s desk. I believe there would be a long line of small businesses coming down the street from the local Starbucks to take advantage of these amenities.
Another benefit to having wifi in the branches is the opportunity for marketing departments to install digital signage throughout the building.
Marketing directors could develop ads that cross-sell multiple products and have them running continuously in all of their branches without even having to leave their office.
They could also use the signs to promote different community activities. And I think you’ll agree, promoting the community is what makes a community bank a community bank!
So before you start contemplating closing a bank branch, consider using wifi to bring the community back into your branches.
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Neal Reynolds has worked with hundreds of banks and credit unions around the country helping them to grow core deposits and market share without growing their marketing budgets. Contact him at [email protected].
