Our Branch-less, ATM-less Banking Future

Norbert Gehrke
Oct 11 · 4 min read
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Our paper-less and cash-less future will certainly drive fundamental changes to the purpose and functionality of bank branches and ATMs, and quite possibly render the bank branch and ATM as we know them obsolete — although, especially in a fast-ageing society like Japan, such change could take some time to manifest itself on the demand side unless catalyzed by other constraints, of which there are many — for example the current pandemic, looming worker shortages, or the need to bring down the expense ratio in the face of continued zero interest rate policy and associated limited net interest margins (NIM).

Therefore, using World Bank data, we have taken a look at the density of bank branches and ATMs across five countries over time, three of them in Asia, and two in Europe.

  • Sweden is seen as the prototype for a cash-less society, with payments for household purchases being made by case only about 6% of the time
  • By contrast, Germany has a cash-less payment rate that is the lowest among industrialized countries, even lower than Japan’s by some accounts, and is widely seen as “overbanked”
  • Singapore is widely seen as Asia’s FinTech hub, and the gateway to ASEAN countries at the very least
  • South Korea, similar to Sweden, is already largely a cash-less society, through tax incentives on credit and debit card payments that started in 2000; the cash-less payment rate for private consumption is at 95%
  • Japan, similar to Germany, has always been a cash-dominated society, with cashless payments historically below 20%; with the government’s goal to increase that rate to 40% by 2025 , the current cash-less payment rate stands at 24%

Bank Branch Density

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Source: World Bank

When looking at the number of bank branches per 100,000 adults as per World Bank data, Japan clearly comes out as the “overbanked leader” with 33.92. As one might expect from a country moving towards a cash-less society, the number of bank branches has been decreasing steadily over the last 15 years, although it is interesting to note that there has been a recent uptick. Germany, starting with a number close to Sweden at the beginning of the 2000s, comes in surprisingly low, and Singapore leads the pack as an example of efficiency with 7.8.

To put things into perspective, based on this data, if Japan were to achieve a similar bank branch density like Germany, it would imply the shutting down of 15,000–17,000 bank branches.

ATM Density

Source: World Bank

Using similar data on ATM density, it might come as a surprise that among our cash-less leaders, South Korea has an ATM deployment that is more than eight times higher than Sweden’s. In turn, one could argue that there is a great opportunity to take cost out of the banking system by radically reducing the number of ATMs.

Singapore is close to Sweden, while Japan are Germany are in a dead heat in the middle of the road, or — if you eliminate the South Korean “outlier”-probably where you would expect them in relation to Sweden given the level of cash-less adoption.

The Spatial Perspective

Since we had our hands on this data, we have given it a shot to transform it into a spatial view, so rather than looking at bank branches and ATMs per 100,000 adults, we measured them per 1,000 square kilometers of land mass. Obviously, the selected countries are very different in terms of geography and topology.

  • Germany and Japan cover approximately the same area, with Japan’s population about 50% greater than Germany’s
  • Sweden’s land mass is 10% greater than Japan’s, but its population is only about 8%
  • Singapore is a minnow in terms of population and area, but its population density as a city state is more than 20 times Japan’s, just like Tokyo’s density is much higher than the national average
  • Korea is about 50% more densely populated than Japan, and also has a high concentration of the population living in the capital region; looking at the data from a spatial perspective does not take into account regional differences within the country based on the data used

What do we get as a result? Singapore and Sweden as the most and least densely populated countries, respectively, brace the other three contenders, as one might expect.

Bank branches per 1,000 sqkm

  • Singapore — 470
  • Japan — 69
  • South Korea — 57
  • Germany — 17
  • Sweden — 2.5

ATMs per 1,000 sqkm

  • Singapore — 3,546
  • Korea — 1,020
  • Germany — 309
  • Japan — 253
  • Sweden — 5

So, wherever you go in Singapore, the next ATM is never far away :-)

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Norbert Gehrke

Written by

Passionate about strategy & innovation in Japan. Connector of people & ideas.

Tokyo FinTech

一般社団法人 (General Incorporated Association) Tokyo FinTech is registered as a non-profit organization in Japan, promoting the domestic ecosystem through innovation

Norbert Gehrke

Written by

Passionate about strategy & innovation in Japan. Connector of people & ideas.

Tokyo FinTech

一般社団法人 (General Incorporated Association) Tokyo FinTech is registered as a non-profit organization in Japan, promoting the domestic ecosystem through innovation

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