Bye-bye branches: Banking hits 'inflection point'

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The successful bank of the future will have fewer branches but better branding, with technological advancements getting priority over the traditional neighborhood touch, according to an analysis that sees an industry "inflection point" at hand.

Bank branches have been in a modest decline over the past several years, but an acceleration in the trend is one of the major changes that many experts see occurring in the future.

Amid shifting customer needs and demands to find new ways to make money as regulatory pressures increase, banks are adjusting their models toward improving the mobile experience and continuing customer service with less of a physical footprint.

Of the 12 largest banks in terms of branches, only two—Wells Fargo and U.S. Bancorp—are increasing branches. Expect the trend to continue, according to financial services firm Keefe, Bruyette & Woods.

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"We believe that reducing the number of branches and reinvesting some of that savings in brand enhancement will be the winning retail bank strategy of the next 10 years," KBW analysts said in a report for clients.

Commercial bank branches edged lower in 2014 to 82,613 from 82,860 a year earlier, according to FDIC data. The number peaked at 83,663 in 2013.