Branch Banking Going Digital-First For Safety And Relevance

Here’s another icy factoid from the year of COVID: up to 20,000 bank branches are expected to close before the pandemic is declared done. It’s triggered a remaking of the entire sector.

Delving into fallout from an extraordinary global health crisis, PYMNTS December 2020 Digital-First Banking Tracker® done in collaboration with NCR Corporation, notes, “Bank customers are taking to mobile and on-line banking in record numbers to maintain their financial lifestyles, with 53 percent of bank customers around the world using banking apps more often now than they did before the pandemic began.”

And the new Tracker goes further, stating that 62 percent of European Union consumers are interested in nixing branch banking for a digital-only experience. That’s up 13 percentage points from 2017, yet the Tracker also notes that “a substantial minority remains that still desires some form of in-branch capability for more complicated transactions.”

There will be a balancing out, and where it will finally come to rest is a guesstimate. What we do know is that to stay relevant, branches must offer comparable digital-first experiences.

Safer, Interactive In-Branch Banking

Branch banking’s demise may be exaggerated at present, but no one doubts the trend or the figures that prove it. With thousands of physical branches sure to be lost to this pandemic, it’s prompting credit unions (CUs), banks and other financial institutions (FIs) to transform faster.

“Almost overnight, many [banks] had to stand up systems and set up processes that would allow them to service small business PPP loans, their digital solutions were pushed to the brink and they had to learn how to operate almost 100 percent remote,” Douglas Brown, senior vice president and general manager NCR Corporation, told PYMNTS.

Brown added that “The biggest lesson that banks should take away from [the pandemic] moving forward is that they can move quickly and that they are able to pivot and be more agile than previously thought. [This year] really showed that banks can do these things and still be successful while conducting business primarily via digital.”

That’s happening as ATMs become ITMs to take on their renewed role in branch banking.

“A survey from September 2020 found that 54 percent of Americans desired a contactless way to open new financial accounts or access existing ones, and new ATMs are being developed to meet these demands,” per the Tracker. “Some leverage smartphone integrations that allow customers to interact with the machines while others deploy biometric verification instead of physical PIN pads for security.” Interactive Tellers (ITMs) accommodate this and more.

‘Banking At The Speed Of Life’

As CarrieAnne Cormier, senior vice president of retail operations and strategy at Massachusetts-based Avidia Bank, recently told PYMNTS, “You hear a lot about the new normal … but I really see it as banking at the speed of life. Financial institutions in general have had to adapt at our consumers’ and our business clients’ paces and how they’re conducting their lives and how fast or slow that’s going.”

Not only is “banking at the speed of life” a very clever way of summing up the current situation, but it accurately depicts the pace of decisions that FIs must make to stay in the game. In other words: do what’s necessary now, or risk being one of the 20,000 branches that shutters.

On that count, the industry has a way to go yet, but partnerships are getting it done.

“The ongoing pandemic has drastically changed the way that bank customers interact with their FIs, and many have switched to digital interactions to stay safe. Banks have been slower in their large-scale efforts to adjust to this change,” per the new Tracker, “with a recent study of 750 banks and financial services firms finding that just 7 percent of FIs have deployed major digital trans- formation efforts this year. Banks appear to be largely aware of this shortcoming, it seems, as just 9 percent identify as “innovation pioneers,” down from 14 percent last year.”