After more than a full year of pandemic-related restrictions, people are starting to remember what life was like prior to COVID-19. The CDC has given the "all clear" for the vaccinated to remove their masks and more states are fully reopening their economies and schools. The "new normal" is slowly beginning to resemble the normal of old.
For some industries, however, there's no turning back the clock. Banking may be one of them as the effects of the coronavirus on the economy and customer behaviors appear to have expedited the transition to a different version of normality for retail branches.
Foot traffic down, online and mobile app use up
As recently as a few years ago, online banking was a service option that FIs offered, but more as a supplement to in-branch products and services. The digital transition has accelerated over time, but picked up real steam in the past 12 months, as evidenced by the dramatic growth in mobile banking app downloads. In the meantime, foot traffic understandably dwindled in the midst of the pandemic, dropping over 30% in the first three weeks of May 2020 compared to the same period in 2019. Teller transactions plummeted even more precipitously, down 32% year over year.
Sajil Koroth, CEO of the customer intelligence gathering firm Kapitalwise, told Benzinga that for any other industry, such conditions might be seen as temporary. But for banks, it may be the new standard operating procedure.
"People think we're going back to normal in 12-18 months. I don't think that's going to happen," Koroth explained. "There is no going back to normal. That's something the banks need to understand." As branches open up, his theory will be tested. Will customers resume previous behavior or have digital habits become just that – habits?
Americans are getting accustomed to all things digital
The movement toward mobile is on display everywhere. Indeed, during the lockdown, millions of Americans leveraged the internet to get their jobs done while their offices were closed. More than 12 months later, however, nearly as many are still working from home as they were last year. According to Gallup, roughly 80% of workers in primarily white-collar occupations in April of last year were working remotely at least some of the time. That average fell only to 72% this past April. And more time online breeds more time online.
As a result, Koroth told Bezinga, leveraging banking products and services online has gone from a once-in-a-while capability to something that customers use regularly.
"Being digital was an option before Covid, but it's not just an option anymore," Koroth explained. "It is the new normal in banking. One day in March, the banks were thrown into a world in which they had to rethink their policies around everything—IT, security, compliance—there was [sic] a lot of things happening overnight."
Rolland Johannsen, a senior consulting associate for the strategic consulting firm Capital Performance Group, pointed out in the ABA Journal that many banks around the country have indeed seen online activity rise more than 50% among their customers.
"Several commercial banks anticipate closing 40% of their office spaces."
It isn't just retail banks in the United States that are leaning more heavily on remote options. Commercial banks across the pond are doing the same. As Reuters reported, HSBC and Lloyds say they anticipate closing 40% of their office spaces, allowing more of their employees to work entirely from home, a move that will help them save on operational expenses.
Where the branch fits
None of this is to suggest that branches are no longer necessary, they may just start to look a little different. As Johannsen writes, prior to the current transition, the role of the branch had not changed all that much for decades. In the past, the branch was where everything between customers and employees took place. Fast forward to today, and the branch is increasingly focused on the customer experience and more advanced transactions like wealth management. Ideally, the branch ought to be viewed as an opportunity to develop deeper and more profitable relationships with customers.
As such, the new normal will affect how banks use their staff, Johannesen further explained. Determining how personnel should be deployed will largely hinge on which customer-facing technologies are offered and how staff can both render assistance and pivot to other FI offerings.
"If all retail functions and services can be provided by universal bankers with the appropriate training and authorities, those should be the only retail employees assigned to the branch," Johannsen said.
One thing that hasn't changed is customers' need for speed. As Koroth mentioned, the last thing customers want is to be the last in line, or to feel like they are, when they're forced to wait for an ATM, interactive teller machine or other customer-facing technology. As such, it would be wise for banks to "scale up their IT and support teams" to ensure they meet the prompt service expectations of their new and regular customers.
The branch still matters, but it needs to evolve to accommodate the new landscape. BranchServ Convergint can help. From consulting and design to integrated equipment, we have the tools, solutions and experience to make the new normal more comfortable, even for change-averse customers and staff. Contact us today to learn more.