Report: Smartphones channel of choice by 2020
2010-08-03
While mobile banking is still gaining its foothold at many financial institutions, a report from the London-based financial consulting firm The Lafferty Group says that online banking via smartphones will be the preferred retail banking method by the end of the decade.

The report says that while more than one-third of banking transactions still take place via bank tellers, that percentage will plummet to 15 percent by 2020 and 5 percent by 2029 as online banking - particularly through smartphones - accounts for the bulk of transactions.

Due to that reduction in branch traffic, researchers said that while bank branches will still serve an important role for initiating sales, continued customer loyalty in banking won't require large branches with numerous teller stations or ATMs.

"In ten years time the disappearance of physical transactions, the branch staff, the physical space and counters will be a remote memory," said the report's author, Jerome Svigals. "The branch functions of sales, tellers and ATMs will be replaced by ‘virtual’ and paperless branches accessible via your mobile banking unit."

The transition is also reflective of the growing popularity of mobile banking. A recent survey by IDC Financial Insights found that 21 percent of people had used mobile banking - a 110-percent increase compared with 2008.

The prediction of the demise of brick-and-mortar branches is nothing new in the retail banking industry, which, after cutting many branches in 80s and 90s, changed course and expanded once again. Bank Systems & Technology reports that despite the increasing availability of technology such as mobile and online banking, a survey last year by Celent found that 75 percent of institutions still planned to increase their branch counts in the future.

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