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August 12, 2011

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Jonathan Charley

All of which makes you wonder why anyone in the right mind would want to buy Lloyds Banking Group's 624 branches and legacy technology at a time when sales and service volumes in branches are declining.

Bob McDowall

The comparison with Google depends on what customers want from a bank- products or services.
The additional capital requirements for systemically important banks will encourage some banks to become smaller through disposal of what they consider non-core/high risk/unprofitable lines-of-business

Sean

Chris, shhh! Stop giving all the secrets away. lol

Iang ( ==> The 20th Century of Central Banking is over.)

Comparing Google/Apple with banks is comparing apple growers with builders. Yes, they both use wood...

Google/Apple are in high margin, high service businesses. Banks are in what could be approximately referred to as zero margin, zero service, zero innovation business.

Comparing to Paypal is more apt. Why can't banks compete at that level? Simple answer: regulation makes innovation impossible (see your own post of 16th if there is any doubt...). Paypal is new and only lightly regulated as a payment system, so isn't saddled with the old models.

Bob Meara

The question within the question in Chris' blog is "do banks continue to need branch networks?". The implied answer is "no". Reality, however suggests otherwise. It's not that "banks haven't let the paradigm shift happen" as Chris suggests, but consumers. Rare is the bank that has more than half its retail customer base enrolled in online banking - after more than a decade. Mobile banking enrollment numbers are smaller still. And, it's not for lack of trying.

Plenty of successful branchless banks exist, and enjoy the benefits of a lower cost base. But, they serve niche markets. Any bank wanting to serve a broader market segment will find itself needing branches.

Retail banks will continue to need branches for some time, albiet fewer of them. That's the easy answer. The real challenge is precisely how to design the future branch network and get there amidst all the other competing needs for capital.

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