![]() ![]() While there have been previous periods of branch contraction, they were clearly tied to economic downturns this most recent wave of retrenchment has persisted through a period of robust economic growth. This reverse correlation is even sharper for the top five US banks-while reducing branches by 15 percent, they increased deposits by 2.6 times (Exhibit 1). Deposits at the 25 largest US retail banks have doubled over the past decade, while their combined branch footprint shrank by 15 percent over the same period. Over the past decade, this relationship between deposit growth and branch density has weakened. Until the financial crisis in 2007, a retail bank’s total share of deposits was tightly linked to the size of its branch network. The traditional distribution-led growth formula no longer applies In some cases, these winners will be incumbents that build on an already significant share in others, they will be institutions newer to the banking industry, which use their agility, strategic aggressiveness, and sharp execution to attract customers. These firms will have taken bold and decisive actions to capitalize on the following shifts that are reshaping the industry. Over the next three to five years, we expect a few players to emerge from the competitive scrum to gain dominant share in their core markets and possibly beyond. The pace of change will likely accelerate, with a select set of large-scale winners emerging in the next three to five years that will gain share in their core markets and begin to compete across borders, leaving many subscale institutions scrambling for relevance. This should be an urgent priority for banks. Four shifts are reshaping the global retail-banking landscape to the point where banks need to fundamentally rethink what it takes to compete and win. Today, the moats that banks have built are more likely to restrict their own progress than protect them from attackers. Marketing investments have traditionally focused on brand building and increasing loyalty: a reputable brand stood for trust and security and became a moat, providing protection against new entrants to the sector. ![]() Few banks stand out for innovation in customer interaction models or branch formats. Retail banks have also not kept pace with the improvements in customer experience seen in other consumer industries. ![]()
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