At Citigroup (C), we just learned that 15% have been
eliminated in the past year. That leaves only 779 in North America.
At Bank of America (BAC), 234 have gone the way of the dodo
in the past several months.
At JPMorgan Chase (JPM), 300 are being shuttered as we
speak.
I’m talking about one of the 21st century’s biggest
endangered species: the bank branch. And chances are, you’re helping eliminate
them almost every single day.
How? Well, let me ask you a question: When was the last time
you deposited a check with an actual bank teller? Or even at an ATM? I can’t
remember personally, and for a very simple reason. I bank with Chase, and the
company’s smartphone app lets me do it right from my iPhone 6!
While I haven’t taken advantage of the service yet, Chase
also allows me to send money via email to someone using my phone. And of
course, I can settle up my electricity and DirecTV bills just by tapping a few
keys on my phone … transfer funds between my accounts … pay off my credit card
and more.
Will bank branches soon be a thing of the past?
Indeed, the pruning of traditional branch networks is one of
the biggest stories in banking this earnings season. More banks are talking
about how they’re willing to forego physical real estate and traditional bank
tellers. That’s partly because it’s cheaper for them to eliminate branches
(boosting profits), and partly because they know customers are getting more and
more comfortable with banking on their smartphones, rather than in branches, at
ATMs or on their PCs.
Chase just said it now has 21 million “active” mobile
banking users, up 50% in the last two years. At Wells Fargo & Co. (WFC),
the number is around 16 million, while at Bank of America, it’s almost 18
million. Those are big numbers, and they’re only getting bigger over time.
Is there a way to profit from this trend toward mobile and
person-to-person payments? Well, the gradual elimination of bank branches helps
boost profit for the mega-banks. So, you could buy one or more of them. But
they face other problems, from ongoing litigation costs to lackluster revenue
growth.
“Is there a way to profit from this trend toward mobile and
person-to-person payments?”
Ebay (EBAY) is about to spin off its PayPal Holdings unit,
with trading as an independent company slated to begin July 20. That could be
another avenue worth exploring, especially considering that the electronic
payments company just reported a 28% rise in payments processed and an 11% gain
in active accounts.
But one of my favorite companies is a highly rated bank
technology provider I added to the Safe Moneymodel portfolio a few months ago.
It’s shooting the lights out, setting new highs week-in and week-out – and I
have every expectation those gains will continue.
In the meantime, let me know what you think about the
endangered bank branch. Is this a positive or negative trend for bank customers
and bank investors? Do you use mobile banking, and if so, what are your
thoughts about its convenience and reliability? What investments, if any, do
you have that are helping you make money from this trend? Use the website
to share your thoughts.
Our Readers Speak
Is a Bloody Wednesday crisis looming thanks to a Federal
Reserve rate hike, perhaps as early as September? Is President Obama on the
right track with his Iran plan? Those are just a couple of the topics you
weighed in on over at the website.
Reader Bob said he doubts Fed Chairman Janet Yellen will
follow up her comments with action. His view: “I’m sorry, but Ms. Yellen is a
talker – a big talker! She just talks and talks and talks and does nothing. The
Fed is way behind the curve and is not in touch with the reality that prices
are rising on all fronts. Yet, Ms. Yellen and her fellow doves do nothing.
“I’ll believe it (any rate increase) when I see it. It was
going to be last month, now September, and now her colleagues are talking 2016.
What is the Fed going to do when this economy explodes, then goes into
recession? It can’t cut rates. It has an almost $5 trillion balance sheet. I
suppose that it will be forced to do what it is doing now – nothing!”
Reader Ray D. also expressed skepticism about an impending
rate hike, albeit for a different reason: “I don’t expect the Fed to raise
interest rates this year because it would strengthen the dollar even more,
causing more losses to the companies doing business overseas. Not a good idea.”
But Reader Mark said the stock market is already in the
process of peaking as part of the turbulent process I’ve outlined. His
comments:
“As far as ‘Bloody Wednesday,’ the decline in the stock
market has started. S&P peaked in June 2007 at 1408, about 14,000 Dow. By
January 2008, the monthly sell signal was generated (MACD-related and other
indicators) – obviously, the daily and weekly signals turned over earlier. As
late as May 2008, the S&P was back at 1280, before it dropped to 520 just
under a year later.
“The NEW monthly sell signal in the S&P triggered in
February 2015. After that, we’ve made a new divergent top, common when you have
a 400% rise over the course of six years. Make no mistake: Both weekly and
monthly indicators are firmly in sell mode, with lots of room to go to the
downside. The sell signal is providing loads of time to exit long positions and
go short (or hedge) before a large decline occurs.”
Meanwhile, with regards to the Middle East, Reader Fred 151
was very negative on the deal with Iran. He said: “This treaty gives Iran
access to billions and billions of dollars to fund their evil activities. This
is money that they desperately need. The alternative was to keep the sanctions
in place and to not facilitate their mad plans.
“They have publicly stated over and over and over that they
intend to destroy us. We should not in any way work with them to further their
goals. This is insanity.”
But Reader Paul F. said achieving peace is the most
important goal in this day and age, even if it comes from a sub-standard deal.
His view: “War is no longer an answer in today’s world. It has become too
small. Many think of wars in monetary terms, but what amount of money can be
put on a life? This comes from a Vietnam vet.”
Thanks for sharing all those comments. If I didn’t get to
yours, or if you didn’t take some time to weigh in yet, make sure you visit
the website soon. Your fellow investors and I want to know what you have
to say.
Other Developments of the Day
Lots of people are sitting on their couches downloading
movies and TV shows, I guess. That’s the only conclusion you can reach after
looking at the latest results from Netflix (NFLX).
Shares of the online video streaming service surged after
new subscriber additions doubled to 3.3 million in the second quarter. That
brought the total number to 65 million, topping analyst forecasts.
Lawyers, lawyers everywhere – that’s what U.S. financial
firms are still dealing with, years after the depths of the credit crisis.
Goldman Sachs Group (GS) was just the latest example, revealing it had to set
aside $1.45 billion for litigation and regulation tied to mortgage practices in
the second quarter. That caused profit to drop to $1.05 billion, or $1.98 a
share, from $2.04 billion, or $4.10 a share, a year earlier.
Initial jobless claims dropped by 15,000 to 281,000 in the
most recent period, besting estimates. We haven’t had claims below 300,000 for
this long (19 straight weeks) in 15 years.
Which candidates are raking in the campaign donations early
on? According to The New York Times, Hillary Clinton is at the top of the heap
with $47.5 million through June 30. On the Republican side, Ted Cruz is winning
with $14.3 million.
But that doesn’t include the PAC money that will also be
used to back candidates. Jeb Bush has raked in $103 million from those outside
groups, while Ted Cruz is in second with $38 million.
Market Roundup Dow+70.08 to 18,120.25S&P+16.89 to
2,124.29 NASDAQ+64.24 to 5,163.18 10-YR Yield+0.002 to 2.352% Gold-$2.80 to
$1,144.60 Oil-$0.43 to $50.96
Source: Money and Markets, A Division of Weiss Research,
Inc. http://www.moneyandmarkets.com
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