Reading the reports and presentations coming out of retail banking today, you'd think the industry as a whole had split into separate personalities. One half says branch banking is dying, not with a bang but a whimper. Others declare that the reports of its demise have been greatly exaggerated.

At a recent Barclays conference in New York, Kelly King, chief executive of BB&T, underplayed the mass branch exodus, but asserted that his bank had continued a "kind of natural pruning process" by closing 3% of its stores. Timothy Sloan, CFO at Wells Fargo, conversely, trumpeted their "9,000 stores" with no plans for significant reductions. Bank of America has been the most aggressive in closing branches, but JPMorgan Chase's plan to open new ones has been just as widely reported. The cacophony of voices and the stark differences in tone and message can certainly convince you there's a growing split in American retail banking.

Let's discuss exactly what we know. First, transaction volumes are going down in-store and increasing in self-service channels. Foot traffic, according to Celent, is declining 5% a year and the firm predicts overall traffic could plummet by as much as 60% within five years. Bain reports that mobile banking traffic was up 50% over the previous year in 2012.

While bankers value that a transaction costing $4.25 in a branch costs less than a dime on a smartphone, firms of all sizes are concerned that as customers perform more transactions themselves, opportunities to deepen relationships become scarce. From my own experience, I can tell you that once you get the self-service ball rolling, customer adoption often outpaces projections due to its simplicity and convenience for the customer.

Second, while branch transaction volumes have declined, "branch-based new account sales have increased slightly" over the past five years, according to Bancography. Bain's report on the increase of mobile banking cited "moments of truth," such as account opening, loan application, and problem resolution. Tellingly, these moments of truth are primarily conducted in the branch. At the Barclays conference, Wells' Sloan stated that "while 80% of our deposit customer interactions are self-service, most customers open their first account and establish their banking relationship with us in a store."

Javelin reports 25% of Generation Y banking customers visit a branch, primarily to open accounts and get advice. So what's a banker to do? Promote self-service or build more branches to open accounts?

There's a famous story about Walt Disney that could be instructive for the industry. Disneyland had recently opened and Disney arrived for a tour. The executive showing him around was horrified to see a newly worn path in the grass where customers had ignored the paved sidewalks and beaten their own trail. When the executive told Disney he'd put up fences and replant the grass, Disney said "Don't replant the grass, rather pave the path the customer has made."  

There's actually a term in landscaping for this behavior: desire path. It's the path that wasn't designed by a landscape architect but created by people making their own way along the most convenient route to their destination. Today's retail banking customers have clearly beaten their "desire path." The data tell us that customers want to bank in the most convenient way for them. That could be on a smartphone. That could be at an ATM or that could be in a branch, depending on which is easiest at the given moment. The very fact that banks haven't addressed these fundamental shifts in customer behavior has led to the industry's discordant voices. Banks don't need to close their branches necessarily, but they certainly must transform them.

ESRI published a study in 2011 that showed the average branch is 36 years old.

I'd suggest that most branch processes and technologies are also outdated based on customer preferences. Let's face it, while amazing progress has been made in online and mobile banking capabilities – and one could argue in ATM – a branch in 2013 doesn't look a lot different from a branch in 1973: a teller line, personal banker offices, a branch manager and an ATM.

I know the solution isn't as simple as "pave the dirt path." But if the questions about branch processes, people and technology are asked and answered in light of what today's customer is saying and doing, the next decade should be one of the most transformative for the retail bank industry. And that gives me hope for tomorrow's retail banking experience.

John Berry is a former channel integration and sales and service executive at Bank of America's retail bank. He can be reached at