States Fitch: “While over the near term these additional technology expenses may offset cost savings from culling bank branches, longer term it should improve earnings and, therefore, returns to shareholders.”

From a credit standpoint, Fitch views the reductions in costs, and therefore improvement in earnings, as the biggest near-term positive. The firm further believes the larger banks with more resources should benefit to a greater degree from both a technology spending and cost-savings perspective.

“Banks unable to adapt their branch models quickly enough may suffer declining market share and customer attrition,” says Fitch. “Additionally, the increased use of technology makes it easier for customers to move funds from one bank to another, which could have the unintended impact of increasing customer attrition rates and decreasing the stickiness of deposits.”

The retreat from the high street is epitomised by Bank of America, which is expected to cut a further 16.000 jobs by year-end as it accelerates a cost-cutting programme that will see the closure of 750 branches over the coming years as more customers embrace the digital lifestyle. The bank, which claims over 10 million mobile banking customers, is planning to close 200 branches this year on top of 178 it closed in 2011.

Similar trends are apparent in other markets around the world. Analysts at Credit Suiisse in Australia are forecasting a massive reduction in the branch networks run by the big four Australian banks. With branch transaction volumes sliding by about five per cent a year, the analysts forecast that as many as a quarter of the 4000 branches operated by ANZ, CommBank, Westpac and NAB could disappear over the next five years.