Like many companies dealing today’s COVID-19 realities, retail banks have to weigh the pros and cons of keeping their branches open. On one hand, there are people who rely on branches being open to conduct their day to day business. On the other hand, there is the threat of spreading COVID-19 to customers and employees. There is no easy call for these institutions.
This morning, the Wall Street Journal published an article, As Coronavirus Spreads, Banks Face a Tough Call on Branch Closures (paywall), that talks about these closures and the internal debates the banks are having.
Yet banks that choose to close must strike a delicate balance—taking measures to keep employees safe while assuring customers they can access their money through a full slate of digital services or at a nearby branch. The greatest risk for banks is how the closures are perceived, industry analysts said.
“You can’t separate people from their money and maintain the confidence of the person in the banking system,” said banking analyst Dick Bove.
While many have migrated away from the need for branches for our everyday banking needs, going to a physical branch is still important to parts of the population. As I stated in my article yesterday, Depositing a Check in the Age of Shelter in Place, many older and lower income consumers still value the face-to-face interactions inherent in a branch visit. For these people, this is the only environment in which they feel comfortable banking.
While I see the need for these banks to shut down some of their branches, I worry about those who have not found the benefits of newer banking technologies and rely on their branches to do banking. How will they get their benefit or retirement income checks deposited? How will they get cash? How will they transfer money from savings to checking?
As we all are scrambling in this new environment, what can be done to help these people in a time when they are already stressed?
Overview by Peter Reville, Director, Primary Research Services at Mercator Advisory Group