In keeping with its restructuring moves, Citigroup Inc. (C) is set to remodel its U.S. branches with greater focus on technology while simultaneously reducing the size of the branch locations.
Per a Wall Street Journal release, Citigroup will set up “compact” branches, measuring between 600 to 1,200 square feet. Such branches will have three to four full-time employees. Notably, existing branches are more than twofold in size, measuring around 2,500 square feet with nine employees.
Focusing on technology, customers can enjoy better banking experience at these revamped bank branches. Touchscreen walls and online terminals would enable customers to scan through products. The better equipped technologies will also assist customers in smoothly availing banking services.
Jane Fraser, CEO of Citigroup’s US Consumer & Commercial Banking has probably presented the upcoming course of actions in the related matter on Monday evening at Money20/20, a conference on digitization of payments.
Citigroup has shed a number of its U.S. locations to cover seven major cities including Boston, Chicago, Los Angeles and Miami. The release included some of Fraser’s prepared remarks. Per a remark, “The last few years we have spent systematically shrinking our bricks and mortar presence to the right locations in the markets we want to win in, and, unlike our competitors, we are largely now done.”
Notably, Citigroup intends to expand branch locations while maintaining a smaller size. In 2015, the company will increase branches to 59 from the current 54 locations in Miami. Also, the company will consider “mini” branches covering 500 square feet with one employee. Following its expansion in Miami, the bank will test its new branch model in New York and Los Angeles over the upcoming five years.
Branches are trending to be less important for banks as customers prefer to connect with banks though the Internet and mobile phones. Such modes of communication not only save time for a customer, avoiding physical visit to a branch, but also saves costs for a bank.
Processing a daily transaction becomes less expensive for banks compared with processing in a big set up with more staff. However, while ATMs and internet facilitates normal transactions including cash withdrawal and check depositing, banks prefer customers to visit branches for important transactions like availing loans.
Citigroup is not the only bank to emphasize on the importance of small banks equipped with upgraded technology. Other banking giants including JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC) have tested similar moves.
Bottom Line
As Citigroup continues to face issues on various fronts including several ongoing legal investigations and the Federal Reserve’s rejection of its 2014 capital plan, we remain encouraged by the company’s streamlining initiatives that will reduce expenses and drive operational efficiencies.
Citigroup currently carries a Zacks Rank #3 (Hold). Middleburg Financial Corp. (MBRG) is a better-ranked stock in the finance space with a Zacks Rank #1 (Strong Buy).
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