• Major US banks plan to evaluate their branch closures on a location-by-location basis as coronavirus cases spike.
  • But shifts in consumer habits might not make it necessary for them to keep all of their doors open.
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As coronavirus cases surge again throughout the US, major banks are evaluating their branch strategy on a location-by-location basis—a departure from their approach during the initial wave of outbreaks, American Banker reports.

Digital Banking Users and Penetration

Major US banks plan to evaluate branch closures.

Insider Intelligence

While none of the four biggest US banks have announced widespread new closures, smaller banks are making more sweeping changes: Many are only serving customers by appointment or via drive-thrus, or even closing branches altogether, largely because they are more often located in small communities that have become coronavirus hotspots.

The first wave of the pandemic saw large-scale temporary branch closures in an effort by banks to protect employees and contain the virus. When outbreaks first hit the US, major banks rolled out a range of emergency relief options to customers and temporarily closed large portions of their branch networks.

Citi, for example, closed 40% of its branches in March, and 16% still remain closed, per American Banker. And Wells Fargo shuttered 25% of its network, with 15% still closed today.

When considering their future branch plans as the pandemic continues to evolve, banks need to take into account consumers’ rising preferences for digital channels.

  • Digital banking penetration in the US stands at 73.1% and is expected to increase to 79.3% in the next five years, accelerated by shifts in behavior during the pandemic. New and existing customers have now had the opportunity for several months to try out and form habits around mobile banking apps. And the longer the pandemic persists, the more consumers will make digital banking a habit instead of a short-term alternative—giving them less reason to return to branches.
  • This could lead banks to permanently close branches, so as to focus more resources on digital channels. Some banks have already been rethinking their branch networks in regions that were seeing less foot traffic even prior to the pandemic. That will likely continue, particularly in areas where lockdown measures or new restrictions are being implemented due to a spike in cases—even banks that do keep branches open will likely see a dip in customers as cases continue to rise. But regulatory bodies will ultimately determine the extent to which banks can radically reduce their physical footprints: The acting head of the Office of the Comptroller of the Currency warned banks in July not to use the pandemic as reasoning to accelerate branch closures.

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