You've heard about them, but what exactly constitutes a micro branch? In our experience, they are a small footprint location with a large digital presence, but do not conform to a defined set of criteria. Many of these branches are under 1,500 square feet, are heavily branded, and feature convenient technology like ITMs and ATMs. The choice to staff the location with on-site bankers depends on the strategy of the financial institution, and many times the services can be achieved using video tellers.
The rationale behind the micro branch is simple. A smaller footprint requires less overhead, which enables a financial institution to be more flexible with their growth strategy. It's become increasingly difficult to justify a fully operational location in all markets, especially areas of dense population where real estate is at a premium. Shrinking your footprint not only reduces your construction cost, but also creates flexibility of where you'll build. This makes it easier for financial institutions to enter markets that formerly seemed out of reach.
While micro branches aren't clearly defined by size, services, or strategy, they all share the same benefits. The benefits range from cost savings to speed-to-market.