Insider Intelligence forecasts that branch penetration will drop from 70.1% in 2019 to 62.3% in 2024. (Penetration is defined as the percent of US bank account holders ages 18 and over who visit a bank, credit union, or a brokerage branch and see a representative in person at least once per year.) Though the pandemic hastened the transition toward digital, the trend was in place well before its onset last year. In 2019, the top nine banks in the US alone spent $64.10 billion on IT and technology expenses, per Insider Intelligence.
The pandemic significantly spurred the adoption of digital banking tools—and will drive the departure from bank branches through 2024. Up to 30% of branches temporarily shuttered in response to the pandemic may never reopen, per an estimate that a former retail distribution executive at Bank of America Corp., Rob Aulebach, gave in a call with UBS Securities analysts cited by S&P Global. Net closures in 2019 outpaced last year, but the 2020 figure doesn’t take into account the temporary, and potentially permanent, shutdowns. The reduction in available physical locations has necessitated the use of digital banking tools, and many expect the changes to last beyond the pandemic: 32% of US consumers said they plan to use mobile banking more post-crisis, according to a survey by J.D. Power last fall.
Banks need to make up for a reduction in usage by adapting their branch strategies to optimize their investments in the channel. Here are two ways they can do this: