Mobile Banking Will Surpass Online Banking

Many years ago, commercial and savings bank branches were built as architectural cathedrals.

Most of these large bank locations have been closed and converted into catering halls and exhibition space. They include the former home of Citibank at 55 Wall Street, Greenwich Savings Bank on Broadway and 36th Street now known as Gotham Hall, Cipriani 42nd Street, formerly known as the Bowery Savings Bank, Capitale at 130 Bowery and the iconic Williamsburgh Savings Bank branch on Broadway in the Williamsburgh section of Brooklyn.

These physical pillars of retail banking were replaced by conventional retail bank locations throughout the city. Over the past four decades a number of branches have been replaced by ATMs. Retail banking continues to be a major component of the New York banking environment. TD Bank, Bank of America, Wells Fargo and Citibank, for example, are scouting out retail locations in the five boroughs and beyond.

Meanwhile, following the arrival of Remote Deposit Capture, which allows a user to scan checks and transmit the scanned images to a bank for posting and clearing, many commercial banks have reduced the number of new bank locations. RDC has been called “the most important development that U.S. banking industry has seen in years” by the Federal Reserve and others. Nearly all of the top banks in the U.S. have either launched the service, or are well on their way to doing so.

With the advent of RDC and the changes in the banking environment, what will become of retail banks? Well, Deloitte reported that “in the past five years, mobile banking has grown nearly 100 percent compounded annually, with the most occurring after 2007, when Apple introduced the iPhone. Though Generation Y is leading the charge in adoption, boomers are coming on strong. Mobile banking is expected to surpass online banking as the most widely used channel by 2020 — if not sooner.” Brian Johnston, banking consultant practice leader and a principal at Deloitte Consulting, said, “mobile banking is well on its way to surpassing online banking as the most widely used banking channel.”

Deloitte reports that the cost of processing a mobile transaction can be as much as 10 times lower than at an ATM. Mobile banking can make a fast contribution to the bottom line. A bank with 100 branches and 250 ATMs could save $5 million annually by converting 20 percent of transactions to mobile. While mobile services are here, banks must prepare to defend their franchises against threats from financial institutions, mobile carriers, credit card processors and other non-bank competitors that want to help consumers conduct financial transactions where they and their mobile devices are.

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