How Technology is Changing How We Bank: What Every Reporter Should Knowby Jennifer Backer April 27, 2016
As more customers shift to mobile and online banking, the banking industry is shuttering brick-and-mortar branches at record speed and investing in improved digital products. That move has meant thousands of layoffs across the industry for branch service staff. Improved technology has particularly disrupted the financial services industry, resulting in a radical shift in how banks deliver their services to consumers, reported CNBC’s John Marino.
Marino reported on Bank of America Corp.’s plan to hire digital ambassadors in its financial centers. The digital ambassadors are trained to educate customers on alternatives to traditional branch banking, which lowers costs for Bank of America. The banking giant also is introducing a “digital bar” for its customers–at more than 1,000 branches over the next few years.
JPMorgan Chase & Co. also trimmed its branches by more than 3 percent year-over-year in 2015, with plans to close more branches in 2016. JPMorgan is introducing new ATMs that offer card-less transactions using smartphone PIN codes. The machines also have the capability to deliver exact change.
JPMorgan and Bank of America aren’t the only banks trimming branch offerings to shed costs. And the shift to online and mobile offerings isn’t limited to American banks. Overseas, Lloyds Banking Group just announced plans to cut 625 jobs in its United Kingdom retail bank, Reuters reported.
While beefed-up technological offerings help banks cut operating costs, they also mean thousands of job losses in towns and cities across the U.S. The federal Worker Adjustment and Retraining Notification Act (often dubbed WARN) requires employers with 100 or more employees to provide a 60-day advance notification of mass layoffs to workers. These details offer great leads for journalists reporting on job losses in the banking industry. Some states also have more restrictive voluntary rules for smaller employers, such as community banks, that are laying off employees. Your local state department of labor press contact can direct you, if you haven’t worked with WARN notices in the past.
Charlottesville, Virginia-based SNL Financial is a financial information and research firm specializing in corporate, financial, market, mergers and acquisitions data for the banking industry. The firm often provides reporters with industry research, as long as reporters credit the information. SNL tracks bank branch closures across the country and provides both analysis and research. Sometimes, SNL analysts also are available to speak to reporters about their analysis and research for stories. SNL said there were 1,614 fewer bank branches at the beginning of 2016, compared to a year earlier.
Overall, U.S. banks have closed nearly 5,000 branches since the Great Recession, according to the World Economic Forum. The Federal Reserve and the World Economic Forum worry branch closures are disproportionately impacting low-income and minority neighborhoods. Many areas already lack adequate or mainstream financial services, raising the costs for low-income customers. Payday lenders and check-cashing services often line the streets of poorer communities and profit by charging high fees in exchange for providing financial services to low-income Americans.
Talk to your regional Federal Reserve branch press officer to learn how it acts to improve services for those without traditional banking services in your city. Also, learn what regional research exists. The Federal Deposit Insurance Corp. and the U.S. Bureau of the Census’ bi-annual National Survey of Unbanked and Underbanked Households offers reporters terrific regional information on the demographics of consumers without access to traditional banking.
Another angle for reporters: how the shift to mobile and online banking impacts community banks in your area. Technology investments and compliance costs increasingly burden smaller banks compared to their larger counterparts. As a result, the technology offerings between large banks and smaller community banks is growing and can possibly hurt the community banking industry as younger customers flock to banks with more robust and modern mobile and online offerings. Ask local community bankers about how they are adopting to the change. What do banking analysts see on the ground?
Want the best tips and story ideas from the Reynolds Center in your mailbox every month? Sign up for our monthly newsletter!