Digital Banking Leaves Teller Deposits in the Distance

Banking, without a backward glance, is leaving the branch behind.

To that end, in an interview last week with CNBC’s “Squawk on the Street,” Bank of America CEO Brian Moynihan noted that the physical act of depositing checks into accounts — where the paper check is handed to the teller, complete with signatures and a picture ID handed over — is on the wane.

“Checks deposited at the branch have gone down to 15% from half 10 years ago,” he told CNBC.  Instead, clients are, increasingly, depositing funds digitally or through the ATM.

And to get a sense of how that digital shift is manifesting itself in terms of that bank’s overall transformation, Moynihan noted that the company had 6,000 branches in at the “high point,” now has 4,000 branches, “and the business is probably three times bigger.”

BofA’s growth, even as its physical footprint has dwindled, spotlights the continued rise of connected banking, where the mobile device has become a gateway to far more than commerce alone.

As has been documented across several studies and several months, PYMNTS research has shown that conducting one’s financial live through digital channels is increasingly becoming one of the key pillars that form the connected economy.

Banking, Highly Connected 

Back in June, with our landmark study that took the digital pulse of more than 15,000 consumers, we found that, overall, 85% of individuals have paid bills and managed their banking online; as many as 46% of the population are deemed “highly connected” to banking activities done online. Drill down a bit, and 91% of these connected individuals do a lot of their banking at home.

See: How 73 Million Highly Connected Consumers Are Pioneering The Connected Economy

In another bid to track the transformation of banking, PYMNTS has devised the Connected Economy CE100™ Index, which includes six firms that are focused on banking; tracking the stock prices of these firms is a proxy, of sorts, for tracking the overall trend toward modernization.

Read more: Index Slips 3.31% as Fastly, Roblox Lose Ground

Banking at one’s own convenience, of course, can only be enabled by initiatives such as mobile check deposit and the ability to gain a holistic view of accounts and activity at a single point of access.

As detailed in this space in the midst of earnings season, the inexorable rise of mobile banking can be seen in commentary put forth by the marquee names of financial services.

In further illustration of the BofA CEO’s comments as detailed above, Bank of America said in its fourth quarter report that active mobile banking users rose 6 percent to 30.8 million during the quarter. Active digital banking users likewise grew 3% to 39.3 million.

J.P. Morgan Chase said in its own results that the branch footprint shrank 1% to a net 4,908 across the firm. CFO Jennifer Piepszak stated in earnings call commentary that that 69% of the bank’s customers are “digitally active” where as many as 80% of check deposits in the quarter were done via QuickDeposit.

It’s important to note that the movement away from the paper check also should see some momentum within business payments.

In a recent On the Agenda panel, CheckAlt Chief Product Officer and Chief Innovation Officer Bobby Rahmanian, Regent Bank Chief Operating Officer Steve Baker and Synctera Co-founder and CEO Peter Hazlehurst discussed the reasons why firms are still clinging to checks.

We’re at least headed in the right direction  — PYMNTS’ data shows that of 400 chief financial officers surveyed, 40% said that they are using paper checks less often than they were before.

But moving the needle beyond those levels, they told Karen Webster, will need a carrot and stick approach. The carrot comes chiefly through improved cash flows (and in some cases, discounts for early payments), while the stick might come through more onerous tax policies (which can make paper checks more expensive).

Read also: Data, New Solutions Ease Switch From Paper Checks to Digital Payments