ZEW Survey Among Financial Market Experts – Customers Have to Expect Additional Closings of Savings Banks and Mutual Savings Banks

The consolidation in the German banking sector will continue in the future. Especially German savings banks and mutual savings banks will close additional branches. On the contrary, foreign private banks will increasingly invest in the establishment of new branches. These are the findings of a recent study conducted by the Centre for European Economic Research (ZEW), Mannheim, surveying around 277 financial market experts.

In the 1990s the on-going consolidation process and the increasing importance of alternative sales channels, such as online or mobile banking or brokers, have led to a number of branch closures in the German credit sector. This process will continue during the next five years. Nearly 70 per cent of the experts surveyed believe that the number of branches will continue to decline. Nearly 13 per cent even expect a high increase in branch closures.

Furthermore, the survey participants assume that the individual banking groups will be affected by the closure of branches to varying degrees. Especially savings banks and mutual savings banks are expected to close additional branches. Only 25 per cent of the experts believe that the number of savings banks branches will remain unchanged during the next five years and only 20 per cent believe that the number of mutual savings banks will remain unchanged. Since the consolidation process within the group of domestic private banks approaches its limits, the share of experts expecting the number of domestic private bank branches to remain unchanged during the next five years has increased significantly to nearly 45 per cent. Ten per cent even assume that domestic private banks will expand their branch network. While domestic banks mainly closed branches in Germany, foreign financial institutions expanded their branch network in Germany. This trend will continue during the next five years. A majority of the financial experts believe that the number of foreign private bank branches in Germany will further increase.

Despite the overall decreasing number of bank branches, the majority of experts surveyed are of the opinion that bank branches will not lose their importance as sales channels in the future. According to their assessment, five years from now, over 40 per cent of all retail banking products will still be sold via high-street banks. Online banking only gains a market share of around 30 per cent on average. “The proximity to and the trust in bank advisors will still represent decisive factors for customers”, says ZEW-expert Matthias Köhler. A majority of the financial market experts believe that a significantly smaller share of 10 per cent will be made up by mobile banking, sales via brokers, mobile employees or other sales channels.

Contact

Matthias Köhler, E-mail: koehler@zew.de