Just as the Internet age was supposed to be the death of print media, the advent of ATMs and online banking spelled the end of traditional banks. The jury is still out on the fate of newspapers. Brick-and-mortar branches, however, are surviving, say bank executives, and they're being built as fast as ever.
Online banking holds the biggest market share on the banking method used most often by consumers, according to the American Banking Association. Across the country, consumers banked online 25 percent of the time in 2009. The second most common method was visiting physical branches with 21 percent. Nearly 70 million American households use online banking services, according to the financial services technology firm Fiserv Inc. In 2007, that number was 48 million, according to the Online Banking Report; in 2005, it was 40 million; in 2000, 15.5 million; and in 1998, only 7 million used the Internet. Forrester Research estimates 92 million, or 76 percent, of American households will bank online by 2011.
But even with the exponential increase in Internet banking, banks are still breaking ground on traditional branches.
Arvest is one of the banks expanding its physical presence in Oklahoma. The Arkansas-based bank had a building splurge in 2009, adding two locations in Stillwater and one in Edmond, bringing its total number of Oklahoma branches to 91. Although they did not build at all this year, Arvest plans on 2011 being another major expansion year.
But this increase in brick-and-mortar locations comes in tandem with a major increase in Arvest's online usage. Customers using their website for their online banking needs jumped 9 percent from 2009 to 2010. Individual visits to the website increased 12 percent. And users of Arvest's new mobile banking - for on-the-go banking on smart phones and other portable devices - jumped 225 percent.
But Arvest doesn't consider this a paradox; the success of its online programs does not equal losing customers from its physical branches. Instead, the bank sees it as a completely different market.
"We're just adding additional households that we wouldn't have had otherwise: younger groups who do all their banking online," said Becky Franklin, executive vice president and sales manager for Arvest in Oklahoma City. She remembers being told brick-and-mortar branches were a thing of past, that online banking and ATMs were going to come in and take over everything. "But we just haven't seen that," she said.
This holds true statewide. Twenty-three institutions added one or more branches in the state in 2009. In the five-year span from 2000 to 2004, 178 Federal Deposit Insurance Corp.-insured bank branches were built in Oklahoma - an average of 35.6 per year, according to the FDIC. From 2005 to 2009 - a span that saw more streamlined websites, even larger numbers of consumers using online services and the coming of online-only banking - brick-and-mortars increased even more: There were 191 built, or 38.2 a year. The years 2006 and 2007 had an even higher spike, with 46 and 45 built respectively. (These numbers do not take into account branches closed down.)
"It might look like various channels are becoming obsolete, but we're not finding that. We're finding that clients are merging channels one to another instead," said Jill Hall, …