Bloomberg.com just showed why traders are shorting department stores en masse, and the proof should concern banks that are still focused on branches. Put simply, department stores accounted for 9% of all retail sales in the early nineties but now account for less than 3%. At the same time non-store retailers (including Amazon.com) now account for over 10% of all retail sales.
The trend couldn't be clearer — or more steady. Given the choice, consumers increasingly favor the convenience of shopping from a digital device.
Financial institutions that are still fixated on branches will continue their decline toward irrelevance, while financial institutions that aggressively make the decision to stand apart on the digital front will be prepared for what the future holds.
30 years ago it would be impossible to imagine that department stores would sink lower than 2% of all retail sales, but today it's a given. The same trend will certainly hold for banks and credit unions as leaders in the industry increasingly offer ways to interact from a digital device (including video banking, remote deposit capture, and loan applications).
The upside is that financial institutions are positioned to win when it comes to data analytics. They're already sitting on a goldmine of transaction data. Now they just have to put it to use.