Bricks and Mortar Branch Banks Have Benefits in Today’s Online World

Bricks and mortar locations continue to play a role in today’s online oriented world. Even online powerhouses like Amazon are recognizing the need for physical sites and now have bricks and mortar locations. This ties in with what I’ve said in previous writing: older ways of doing things can continue to have a place if they still offer an advantage. And, bricks and mortar locations clearly do.

Physical locations have value for retail stores that sell merchandise. But, they also have value for banks. In fact, we are seeing some of the very same advantages with bricks and mortar bank branches that we see with physical retail stores. Like shopping, banking that had traditionally taken place in physical branch locations has been shifting toward online. Yet, like retail merchants, banks benefit from keeping physical locations open, thus, integrating the bricks and mortar branches with online.

A good discussion of this appears in the August 28, 2017 Crain’s Chicago Business article “The Dodo is Extinct, but Bank Branches? Not So Fast” by Steve Daniels. According to the article, although the number of branch banks is down, bricks and mortar banking locations are not being completely eliminated. As the Crain’s article points out, physical branches create awareness of the bank and help attract customers.

I’ll add that this is very much like what department store chain Kohl’s found when it experimented with closing some stores, a topic I discussed in previous blog post. Online sales increased in areas where Kohl’s had a bricks and mortar store. Consequently, Kohl’s decided not to close physical locations.

According to the Crain’s branch banking article, “The reason branches aren’t going away soon is clear: without branches banks have little chance of competing for new customers in distinct markets. “Most of the accounts are still opened in branches” says Edward Wehmer, CEO of Wintrust, the fifth largest deposit holder in the Chicago area.” Crain’s points out that the decline in branch bank locations is due to factors such as the Dominick’s food store chain closing down, which means the many bank branches in those grocery stores are now gone. Thus, the decline is not a sign that branch banks are on the route to complete demise.

As I see it, there is a key lesson here: as technology advances, it’s important to think about what value there might be in integrating the new with the old. With bricks and mortar versus online, there are clearly benefits to integrating the advantages of the two.

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