Millennials show French banks lagging on branch cuts

Bloomberg

Jean-Baptiste Esmenjaud, 26, hasn’t set foot in his bank in over five years.
“La Banque Postale lets me do everything online, and I speak over the phone once a year with an adviser,” said the biology student, a decade-long customer of the state-backed bank whose 9,000-plus French branches gives it one of Europe’s biggest such networks. “I’ve been moving a lot and I took a year off to travel around the world. For me this is the only way to bank.”
Younger customers like Esmenjaud — the so-called Millennials — may finally push French banks to close more branches after lagging behind their European peers over the past five years. French branch reduction has been the smallest in the euro area’s main banking markets, European Central Bank figures show, making it the country with the most number of branches in the region.
“The French social system, especially banking contracts, are very protective, which complicates any plan to reduce branches, “ said Jean-Marc Velasque, a partner at consulting firm Nouvelles Donnes. “That’s even as their revenue is coming under more and more pressure from fintech companies and online banks.”
Between 2010 and 2014, French banks closed 3 percent of their branches, Dutch lenders shut 35 percent of theirs, while Spanish and German banks closed 26 percent and 11 percent, respectively, according to figures from the European Central Bank. In Italy, the government is said to have weighed measures to help banks cut jobs as part of a plan to boost consolidation among its lenders.
France has kept its branches even as client visits are tumbling. Only 21 percent went to a bank branch several times a month last year, down from 52 percent in 2010, according to a BVA survey for the French Banking Federation.
Across Europe, pressure to shut branches is mounting as margins are squeezed by record-low interest rates, sluggish economic activity caps loan growth and technology companies sweep in with new online banking products. Western Europe is the only region in the world where retail banking revenue fell between 2010 and 2015, and its annual average 2.8 percent pick up through 2019 will be smaller than in any other part of the world, according to the Boston Consulting Group.
New players are emerging across the continent peddling low-cost bank accounts with only a card and online support, like Germany’s Number26 GmbH. New fintech players like Linxo, a budgeting application, are out to steal at least part of the younger customers’ attention.
In France, some unlikely players are joining the fray: Mobile operator Orange SA is launching its online bank at the start of next year, leveraging hundreds of stores as well as years of experience in mobile payments in Africa. It bought a majority stake in the banking unit of Groupama, a French insurer, and is seeking to sign up 2 million clients.