While many of us know that the retail world has changed as a result of the COVID-19 pandemic, the true extent of the changes has yet to be fully realized. There are still far too many unknowns for anyone to definitively say what the future holds. This is also true for retail banking and the branch banking system. It is hard to believe that consumers will tolerate anything different from what they experience (and expect) from other retailers.
According to a recent article in Forbes, Waiting To Reopen: What Branch Banking May Look Like After COVID-19 branches will have to take many of the same precautions a grocery store or a book store.
How banks and credit unions decide to handle reopening can vary from one financial institution to the next. The American Bankers Association has created a reopening matrix to help guide banks in their decision-making. The matrix offers guidance on things like:
When to begin reopening branches to customers
Enforcing social distancing measures between customers and staff inside branches
Continuing to promote remote work for staff
Cleaning and sanitation procedures
Health screening measures for employees and what to do if an employee tests positive for COVID-19
Do these guidelines sound familiar? To me they are, indeed, very similar to the types of precautions any retailer is putting in place for their customers and employees. The article goes on to outline some other precautions banks may consider instituting in branches, but they all are supporting the guidelines outlined above.
I think the larger issue is what is the future of the branch overall. The article reports that, so far, the pandemic has had little effect on the branch system.
Some banks have taken the additional step of closing branches permanently. According to data from S&P Global Intelligence, 157 bank and thrift branches were closed in April 2020, while only 17 branches opened. Closing branches can be a cost-cutting measure for banks and credit unions, allowing them to streamline overhead expenses.
On the other hand, some banks are moving ahead with expansion plans to open new branches. That’s encouraging if you’re worried about branch banking disappearing altogether as a result of the COVID-19 outbreak. And at least one survey shows that consumers still want branch banking access.
I think it is a little too early to say that the branch as we currently know it will go unchanged. As I noted in an earlier post, I think the branch banking system will change as a result of the pandemic. As consumers increase their use of digital banking methods, the need for the branch will decrease. As a result of this, and the continuing concern about COVID-19, people will decrease their reliance on branches and banks will have to justify the costs associated with maintaining their current branch footprint.
I guess only time will tell if I am right.
Overview provided by Peter Reville, Director, Primary Research Services at Mercator Advisory Group.