When the bank comes to you: Branch network and customer omnichannel banking behavior

Banks today have been increasingly reducing their physical presence and redirecting customers to digital channels, and yet, the consequences of this strategy are not well studied. This paper investigates the effects of banks' branch network changes (i.e., branch openings and branch closures) on...

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Main Authors: ZHOU, Mi, GENG, Dan, ABHISHEK, Vibhanshu, LI, Beibei
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Language:English
Published: Institutional Knowledge at Singapore Management University 2020
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Online Access:https://ink.library.smu.edu.sg/sis_research/5973
https://ink.library.smu.edu.sg/context/sis_research/article/6976/viewcontent/WhenBankComestoYou_av.pdf
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spelling sg-smu-ink.sis_research-69762021-05-31T05:55:10Z When the bank comes to you: Branch network and customer omnichannel banking behavior ZHOU, Mi GENG, Dan ABHISHEK, Vibhanshu LI, Beibei Banks today have been increasingly reducing their physical presence and redirecting customers to digital channels, and yet, the consequences of this strategy are not well studied. This paper investigates the effects of banks' branch network changes (i.e., branch openings and branch closures) on customer omnichannel banking behavior. Using approximately 0.85 million (33 months') anonymized individual-level banking transactions from a large commercial bank in the United States, this paper shows the asymmetric effects of branch openings and branch closures on customer omnichannel banking behavior. In particular, we find that branch openings increase customers' branch transactions; however, the first branch opening leads to a migration of complex transactions to the branches, which might result in a net decrease in online banking in the short term. As consumers interact more with the physical channel, there is a gradual synergistic increase in customers' transactions via online banking as well as alternative channels due to a learning spillover effect. The learning spillover effect goes from easy online inquiries to more complex online transactions as additional branches open. On the contrary, branch closures result in a favorable migration pattern from the branch channel to online banking. This pattern, however, could be reversed once the last branch closes within the customer's residential neighborhood. Our study teases out the underlying mechanisms that drive customer omnichannel banking behavior in the context of branch openings and branch closures, and discusses the managerial implications for branch network restructuring and banking channel management. 2020-03-01T08:00:00Z text application/pdf https://ink.library.smu.edu.sg/sis_research/5973 info:doi/10.1287/ISRE.2019.0880 https://ink.library.smu.edu.sg/context/sis_research/article/6976/viewcontent/WhenBankComestoYou_av.pdf http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection School Of Computing and Information Systems eng Institutional Knowledge at Singapore Management University branch network branch openings branch closures online banking omnichannel propensity score matching difference in differences Computer Sciences Finance and Financial Management Operations and Supply Chain Management Operations Research, Systems Engineering and Industrial Engineering
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic branch network
branch openings
branch closures
online banking
omnichannel
propensity score matching
difference in differences
Computer Sciences
Finance and Financial Management
Operations and Supply Chain Management
Operations Research, Systems Engineering and Industrial Engineering
spellingShingle branch network
branch openings
branch closures
online banking
omnichannel
propensity score matching
difference in differences
Computer Sciences
Finance and Financial Management
Operations and Supply Chain Management
Operations Research, Systems Engineering and Industrial Engineering
ZHOU, Mi
GENG, Dan
ABHISHEK, Vibhanshu
LI, Beibei
When the bank comes to you: Branch network and customer omnichannel banking behavior
description Banks today have been increasingly reducing their physical presence and redirecting customers to digital channels, and yet, the consequences of this strategy are not well studied. This paper investigates the effects of banks' branch network changes (i.e., branch openings and branch closures) on customer omnichannel banking behavior. Using approximately 0.85 million (33 months') anonymized individual-level banking transactions from a large commercial bank in the United States, this paper shows the asymmetric effects of branch openings and branch closures on customer omnichannel banking behavior. In particular, we find that branch openings increase customers' branch transactions; however, the first branch opening leads to a migration of complex transactions to the branches, which might result in a net decrease in online banking in the short term. As consumers interact more with the physical channel, there is a gradual synergistic increase in customers' transactions via online banking as well as alternative channels due to a learning spillover effect. The learning spillover effect goes from easy online inquiries to more complex online transactions as additional branches open. On the contrary, branch closures result in a favorable migration pattern from the branch channel to online banking. This pattern, however, could be reversed once the last branch closes within the customer's residential neighborhood. Our study teases out the underlying mechanisms that drive customer omnichannel banking behavior in the context of branch openings and branch closures, and discusses the managerial implications for branch network restructuring and banking channel management.
format text
author ZHOU, Mi
GENG, Dan
ABHISHEK, Vibhanshu
LI, Beibei
author_facet ZHOU, Mi
GENG, Dan
ABHISHEK, Vibhanshu
LI, Beibei
author_sort ZHOU, Mi
title When the bank comes to you: Branch network and customer omnichannel banking behavior
title_short When the bank comes to you: Branch network and customer omnichannel banking behavior
title_full When the bank comes to you: Branch network and customer omnichannel banking behavior
title_fullStr When the bank comes to you: Branch network and customer omnichannel banking behavior
title_full_unstemmed When the bank comes to you: Branch network and customer omnichannel banking behavior
title_sort when the bank comes to you: branch network and customer omnichannel banking behavior
publisher Institutional Knowledge at Singapore Management University
publishDate 2020
url https://ink.library.smu.edu.sg/sis_research/5973
https://ink.library.smu.edu.sg/context/sis_research/article/6976/viewcontent/WhenBankComestoYou_av.pdf
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