Recently, I have felt like a bit of a one trick pony.
I have written a number of posts on the future of the retail branch by piecing together information available from articles and other data sources to start to paint a picture of the changes facing the branch as a result of the economic turmoil caused by COVID-19.
Enough about me.
The “lockdown” or “shutdown” caused by the pandemic has forced consumers to change their banking habits. With branches effectively closed or reduced in their ability to serve customers, people have had to explore other options when it comes to banking. For many that meant turning to their computers and phones. For some it meant a great reliance on ATMs. Trust has always been the issue with the new technology. Many Americans simply did not believe that their money was safe with these technological “solutions.” These folks felt their money was safer when they handed it to a teller.
Well, here comes the pandemic and branches are closed. People need to transact with their bank and for many of the branch loyal, alternative methods had to take the place of going to the branch – like it or not. They have started to use the alternative banking methods for the first time or are relying more on these methods for their banking needs. Will these new behaviors stick?
Banks are taking notice of this shift. As an article over the weekend in the wall Street Journal, People Aren’t Visiting Branches. Banks Are Wondering How Many They Actually Need. points out:
People are visiting bank branches less frequently during the coronavirus pandemic. That could speed up some banks’ plans for shutting them down.
Branch traffic fell more than 30% in April and the first three weeks of May compared with the same period last year, according to Novantas, a financial-services research firm. Teller transactions dropped 32% in March and April compared with the same period last year, Novantas said.
The forced shift toward mobile banking delivers an important win for traditional banks, which have been trying for years to steer people away from branches and toward apps and websites for routine transactions. If customers adapt without much complaint, that could give banks fresh reasoning to expedite planned closures and consider additional ones.
In the retail banking world, branches are a huge overhead burden. It costs a lot for the real estate and to staff these retail outlets. Some branches make sense, but perhaps the quantity does not. This article makes some very relevant points about the need to evaluate the branch system in light of the changes brought about by the “shut down” and the changes in consumer behavior.
As a side note: While I generally think the “reader comments” section of an online article are largely worthless, the reader comments to this article are actually quite interesting.
Overview provided by Peter Reville, Director, Primary Research Services at Mercator Advisory Group.