Toronto-Dominion Bank plans to cut just 10 Canadian branches from its retail footprint this year, a slight decrease that speaks volumes about the attachment big banks still have to their extensive networks.
TD operated 1,165 branches in Canada at the end of 2015, implying that the cuts by the end of this year would amount to less than 1 per cent – even though 75 per cent to 80 per cent of customer transactions among the big banks are now handled outside of branches.
“Branches are incredibly important and we think they will continue to be,” said Teri Currie, group head of Canadian Personal Banking.
Bank branches have emerged as a key challenge for the big banks in recent years. Extensive networks display signs and logos that provide considerable marketing value. However, the expense of operating branches comes at a time when banks are trying to cut costs and deal with nimble new competitors that aren’t burdened by legacy issues.
Online lenders, robo-advisers and digital “branchless” banks – often grouped together as financial technology firms, or fintech – believe their branchless operations give them a significant competitive advantage over established players.
The role of branches continues to be evolve in this age of omnichannel and digital banking. The depth and breadth of these changes continues to be chronicled, including recent reports by Mercator Advisory Group and others. This changing role includes a greater emphasis on education and advice in a wide variety of areas, including credit and credit, mortgages, small business lending, and wealth management banking and investments, in reconfigured branches.
Overview by Ed O’Brien, Director, Banking Channels Advisory Service at Mercator Advisory Group
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