Mark Twain was famously quoted (or misquoted) for saying “Just say the report of my death has been grossly exaggerated.”
While I have written several times in this forum that I think the bank branch, as we know it today, is going to change and the number of bank branches will likely decrease. The great prognosticators (whoever they are) have been predicting the death of the retail branch since the first ATM was introduced at a Chemical Bank in 1969.
Having said that, now, more than ever there are options for consumers to conduct many of the transactions that were once only available by going to a physical branch. Now, with online and mobile banking, consumers can do so much more without visiting a branch. The outbreak of COVID-19 and the subsequent temporary closure of branches has forced many bank customers to use these features out of necessity.
A recent post in American Banker, BankThink Don’t underestimate the power of branches post-pandemic (paywall?) talks about the resiliency of the branch and the important role it plays in retail banking. The author takes a very even handed assessment of the current situation while defending the branch.
If so many banks have been able to function and serve their customers with such restricted branch access, many wonder if this truly is the new normal.
Maybe this time will finally be the tipping point.
However, I would not consider the customer patterns or behavior these past three months as a signal that they are abandoning branches.
There is a difference between what someone is forced to do when options are taken away, and what a person chooses to do while other options remain.
As the author points out, some people will be very happy to return to bank branch and conduct their transactions the same old way as before, but others will not. Some will continue on with their newly adopted methods for banking and thus reduce their need for a branch.
The great unknown is, however, what proportion will go back to regular visits to the branch and what proportion will not? Quite frankly, this is a question that any business with a retail footprint is asking itself.
The death of the branch, at this point, is just hyperbole. It makes for a catchy headline, though.
Overview provided by Peter Reville, Director, Primary Research Services at Mercator Advisory Group.
