Mobile technology is changing the way we bank. Everyday transactions are conducted in the palm of our hand and more financial services are going mobile as the technology evolves. The rise of mobile banking and behaviors of the millennial segment have contributed to a rapid attrition of branch traffic. Without the foot traffic of the past, branch profitability has also declined, resulting in institutions closing unprofitable branches and transforming the remaining ones to fit the banking needs of the modern consumer.

According to Neilsen, 71% of the U.S. adult population owns internet-enabled smartphones, with Millennials between the ages 18 to 34— one of the largest consumer segments at 77 million people— as the biggest constituency of those users. Around 85% of Millennials reported owning a smartphone as of 2014’s second quarter, up 6.5% from 2013.


A Federal Reserve report states that 52% of smartphone owners that also own a bank account used mobile banking in the last twelve months, up from 51% a year earlier. Additionally, the report indicated that adoption of mobile banking is increasing— 11% of mobile phone users with bank accounts that are not currently using mobile banking said they probably or definitely will do so in the next year.

As smartphone usage and adoption of mobile banking has climbed, so has the number of branch closures. The U.S. has seen a consecutive year-over-year increase to branch closures since 2011. The most recent data reported by SNL Financial shows that 1,137 new branches opened while 2,599 were closed in 2014, resulting in a 1,462 net loss—just shy of 2013’s record of 1,487. Furthermore, Codigo’s Branch Transformation Report shows the industry slowing down new branch construction, but accelerating branch renovations— 32% of all institutions reported adding a new location this year, down from 39% in 2014, but 51% of institutions plan to renovate at least one branch in 2016.


The data shows that the mobile revolution has had a direct effect on branch foot traffic and ultimately branch closures. However, as banks and credit unions slash unprofitable branch locations, they are remodeling the remaining banking centers to better suit the needs of today’s modern consumer. Branch traffic remains on the decline, but the importance of consumer experience while in a physical location seems to remain a high priority.

A new branch network concept is forming, following the mantra of “less is more”. Larger institutions have already bought into this idea. PNC, BOA, JPMorgan, and other large institutions are closing unprofitable branches in bunches, transforming remaining locations for tech-savvy Millennials, and ramping up their online and mobile product offerings. It’s a recipe for the future, but it’s cooking now.