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When it comes to revenues, banks sell better at branch. When it comes to costs, branch may be the costliest place for doing business so but progressive businesses are more obsessed about increasing revenues than cutting costs. I said it here: Secret Of Survival Of Bank Branches.

But I’m not the only one:

#1. The Tale Of The Digital Banks

http://www.gonzobanker.com/2015/07/thetaleofthedigitalbanks/

QUOTE

• Yet while the demos and screen shots at events like Finovate have provided fascinating fodder regarding the future of digital banking, the FACTS show that these buzzworthy players (such as Simple, Moven, GoBank and BankMobile.) have had INFINITESIMAL IMPACT ON MARKET SHARE.
• But here’s the real clincher: in the same period that the TOP 10 INTERNET ONLY BANKS GREW DEPOSITS BY $175 BILLION, THE THREE MAJOR LEGACY RETAIL POWERHOUSES – CHASE, WELLS AND BANK OF AMERICA – GREW DEPOSITS BY $1.27 TRILLION. Holy cow!

ENDQUOTE

#2. Mobile Banking Grows, But BRANCHES STILL DRIVE BUSINESS

http://thefinancialbrand.com/55758/mobile-banking-branch-delivery-channels/

QUOTE

• The mobile channel continues to gain ground with banking consumers, BUT PHYSICAL BRANCHES REMAIN CENTRAL TO THE RETAIL DELIVERY STRATEGY for most institutions.

ENDQUOTE

Why have traditional banks outperformed digital-only banks? Is it

• By virtue of their branch networks? OR
• Because, God forbid, they have superior digital technology compared to digital-only banks? OR
• Owing to factors that have nothing to do with branch-versus-nonbranch channel mix?

IMO:

Traditional banks with branches have not only sustained themselves but flourished despite dire predictions to the contrary. Branch still remains central to retail banking. Going by one after another announcement by fintech companies announcing partnership with traditional banks after having threatened to disrupt them in the past – e.g. TransferWise (https://www.finextra.com/news/fullstory.aspx?newsitemid=28281) – I’m wondering if digital-only banks are now fearing disruption by traditional banks.

But, Finextra readers, please review the facts and decide for yourselves.

Season’s Greetings!

I keep reading the digerati calling out bank or other finserv providers for lack of this and lack of that without ever listing what exactly they want that banks and FSPs don't provide. It's refreshing to come across an actual wishlist. Some of your items are / were already available.

#1: PayByTouch and SQUARE tried this via fingerprint and photo years ago. Unfortunately, both products died due to lack of consumer offtake.

#2: Cash! Noncash: How much surcharge will you be willing to pay?

#3: Cash! Credit card. Both work 24/7/365.

#4: International credit card. Keeps you shielded from LCY.

#5: Cash! Noncash - PayPal, Venmo, Chillr, etc.

#6: Any scheduled bank with deposit protection guarantee. 

Have you tried them? What limitations, if any, did you face with them?

Disruption. Noun. Disturbance or problems which interrupt an event, activity, or process. http://www.oxforddictionaries.com/definition/english/disruption

Disrupt. Verb. To cause (something) to be unable to continue in the normal way. http://www.merriam-webster.com/dictionary/disrupt

I hate to prolong this, especially in this direction, but I can't help it if there are several dictionaries!

@ChrisYaldezian:

I don't know of any SQUARE-clones from banks but taking your word that there are, here's my take: It's NOT at all because they want to have the merchant acquirer relationship - because they already have it with SQUARE et al. Nor is to become a merchant aggregator like SQUARE - most banks I know won't touch a typical SQUARE merchant with a 40 feet bargepole because of their higher risk profile. It's because some merchants they already have a merchant acquirer relationship with do a lot of cash business today e.g. COD business of ecommerce giants like Flipkart, Amazon India. By empowering such merchants to take cards via wireless POS / mPOS at the point of delivery, they hope to convert the cash transaction to credit / debit card, thus earning a new source of interchange. The interchange % is the same as the normal interchange rate but it's applicable on a bigger pie.

My definition of disruption is death / ceasing to exist. IMO, one dollar dropping to 75 cents is "decline", not disruption / death. But you're free to have your own definition. 

@BrettKing: Branch banking still popular with Americans;))

@BrettKing:

In your post I cited above (If you're investing in branches - look out), you wrote: "The current network of branches for most retail behemoths has absolutely no chance of survival in the near future. I'm not talking 10 years out here... I'm talking in the next 2-3 years." That was in 2011. To me that sounds like you predicted the death of branches by 2014. It's 2015 now. Branches are still around. In some countries like India, they're increasing in count. The title of this latest Bankrate article says it all about USA: Branch banking still popular with Americans. To me, death means ceasing to exist. That simply hasn't happened. Now talking about centricity of branch banking, reduction in centricity sounds like decline, not death, even to a person like me who you say is unfamiliar with nuance.   

I'd also look carefully at the reason given in the Bankrate article for people visiting branches: Not because they're old; not because they're tech unsavvy; but because people are "anxious about money and feel like seeing where their money is" aka branch. As we know, anxiety about money is a cyclical thing, so branch visits will also be cyclical. This totally resonates with my oft-expressed view that transitions from physical to online can also work in the reverse direction.

For all the BORDERS moment, don't forget the OYSTER moment when the eBook store shut down recently. According to this NYT article, "EBook Sales Slip, and Print Is Far From Dead". Don't also forget public announcements from TJX and Ross about increasing their physical store presence in USA. So physical and online companies can both shut down, that's a reflection of individual companies' performance, not necessarily the innate strengths of one channel over the other.

Already answered: PayPal, SQUARE, Starbucks and Apple Pay "...helped merchants otherwise accepting only cash to start accepting card payments. Banks gained a new source of interchange revenues." Note also that PayPal and SQUARE are both merchant aggregators and get their fees from the higher MSC / MDF borne by their merchants - e.g. 2.75% in the case of SQUARE - and not from banks. In other words, banks don't suffer any reduction in their realization when the transaction happens via PayPal / SQUARE. 

Well said @BjornSoland. User education fails to deliver. Not just security. I for one have never believed that if people went thru' financial literacy training or used money management apps, they'd suddenly become more thrifty or investment ninjas or whatever. Money is something basic. "Earn more, spend less" should be all the lesson people need! But that's only me!

@ChrisYaldezian:

This is becoming like a broken record. Which part of my above comment is not clear?

• “PayPal, Starbucks, ApplePay - and Square, which you've missed out but is often quoted in the same breadth as the others - none of them has disrupted banks. On the contrary, all of them have helped boost revenues of banks.”
• (Chris Skinner): "In fact, the more I think about things the more I realise that most fintech is supplementing the bank industry rather than disintermediating, disrupting or displacing it.”
• When a partner wins a deal and earns a commission for that, certainly IBM's own revenues come down. But does that mean channel partners are disrupting IBM?

I already know many banks who use analytics and omnichannel:

• Analytics or Hair Splitting?
• Are Banks Losing Customers Or Shedding Customers?
• From Multichannel To Omnichannel And Beyond

While there’s scope for improvement, that’s an eternally valid platitude - applicable not only for banks but for all other industries, not just for these two technologies but for all other technologies.

@BrettKing:

You should know from the sequence of comments that your name wasn’t called out by me but by the commenter above me, who virtually ordered me to "Read some Bret (sic) King." In reply, I referred to your claims about death of cash, plastic and branch. I didn’t make generic attacks. You’ve made those specific predictions in your own blog posts Why Ebola might kill cash, Why the iPhone 5 means the end of the swipe and cards and If you're investing in branches - look out. Maybe it's only me but words like "kill", "end" and “absolutely no chance of survival” usually mean death.

In response, what do I see? "6% decline in branch transactions" (Source: Your blog post titled Predicting the future is hard, but online surveys are useless trending indicators); "Cash on the wane" (Source: FT article titled Cash on the wane in UK as plastic powers ahead). ‘6% decline’? ‘Wane’? They don't mean death. To cite a more recent source than the FT article, this Financial Brand article says "cash is still king today". ‘Plastic powers ahead’. That actually means growth – not death - of plastic. Let’s agree to disagree but I continue to believe that there's no disruption / death of cash, plastic or branch as of now.

Your response Predicting the future is hard, but online surveys are useless trending indicators seems to be baselined to your predictions made by you somewhere else. I never called out those predictions. So, I didn’t think it warranted my comment. That said, I did reply to your comment on this post right below it. I’ll continue to make my future comments, if any, on this post below this post.