Banks are closing their branches to customers en masse

65% of managers believe that the branch network model of banks will disappear in five years. This shows a report by the Economist Intelligence Unit (EIU). The reason is the pandemic, which has accelerated the use of digital banking services among consumers of all ages, as well as the end of the traditional bank branch.

Following the cost-cutting measures introduced after the 2008 financial crisis, a series of branch closures has taken place. The trend is accelerating thanks to digital channels such as mobile banking. The latest cloud technologies, artificial intelligence (AI) and application programming interfaces (APIs) are seen as drivers of transformation, according to two-thirds of senior banking executives surveyed.

In the last year alone, a number of Europe‘s largest banks have announced that they are closing much of their physical network. HSBC closed 82 branches, citing the pandemic as a factor that helped “crystallize its thinking” in terms of reducing reliance on customer service at the counter.

“Like many businesses, we need to change for the future, in which branches will be used differently and visited less frequently,” the bank said in January.

Earlier this year, TSB announced the planned closure of more than 150 branches in 2021, a step that has cut about 1,000 jobs. Allied Irish Bank, meanwhile, has announced plans to reduce its staff by 1,500, merge branches and vacate space in a bid to cut costs amid accelerating digital banking and the home office during the pandemic.

Meanwhile, Germany’s second-largest bank, Commerzebank, is closing more than 340 branches and cutting a third of its staff to about 10,000.

Sweden’s Handelsbanken has revealed that it will cut its branch network by almost half, while the merger of France’s Societe Generale with the merger of its retail business and subsidiary Credit du Nord will lead to the closure of 600 of the 2,100 branches.

Unlike in the post-financial crisis period that began in 2008, banks are now closing branches not only to cut costs but also to restructure them.

In fact, they are currently investing heavily in technologies to improve customer service through digital channels and fintech products. The survey shows that 38% of banks innovate by investing in fintech startups or acquiring them directly.






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