Tom Dougherty, CEO – Stealing Share
11 February 2019
BB&T-SunTrust merger just the start
The proposed BB&T-SunTrust merger represents the beginning of a whole new era of banking. Now, I’m under no illusion that mergers like this will enhance banking or that customers will get better pricing on bank accounts and loans.
Not by a long shot. But the BB&T-SunTrust merger is just one of many coming down the pike. Chemical Bank and TCF Bank. Key Bank and First Niagara. Huntington Bank and FirstMerit. Those are just a few mergers already in the works or being completed.
And there’ll be more.
Why? The banking industry is finally evolving. For years (decades?), banks remained stubborn in refusing to see the model has changed. No longer do customers view going to a branch as the way to most effectively bank. Even the ones that do, the post-war generation, are unfortunately declining in number.
No, we bank with our phones in a world where we’re constantly in transit. In fact, I imagine customers think adding an account at other bank is less problematic than they once did. Some banks allow you to open accounts online. Without talking to a single person.
“But these bank mergers signal that bank brands are finally getting it. The industry is changing. And, if you don’t change along with it, you die.”
Why there will be more like the BB&T-SunTrust merger
So why will this bring on more deals like the BB&T-SunTrust merger? Because the number of branches needs to be reduced, with more investment into technology. In this case, 740 of the two banks’ branches reside within two miles of each other. You can expect most of those to close.
Basically, consolidation in banking is more attractive because brands will succeed based on their online presences, rather than physical ones. The hurdle to previous mergers was operating branches that bankers thought they needed. No more.
Of course, there will still be branches. There are still services you need them for and they make a bank brand seem real. But they are not as critical as they once were. The results of the BB&T-SunTrust merger will exist on an internet plane.
Some banks don’t get it. I still remain flummoxed why Capital One thinks it needs coffee shops to make its branches viable. When it really just needs to shut them down.
But these bank mergers signal that bank brands are finally getting it. The industry is changing. And, if you don’t change along with it, you die.
It’s not all that dissimilar to what’s happened with retail. We all drive by those empty malls while retailers remain dumbfounded by what happened. Some banks realize they don’t want empty branches. They want something more.
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