Banking Dive, May 6, 2020: Do bank branches have a future? Pandemic reveals ultimate ‘A/B test’
As the coronavirus pandemic upends the traditional way many industries have have operated over the years, some banking and fintech leaders say a lasting impact on the banking sector could be the disappearance of branches.
A study by an economist at the University of California, Berkeley, found when merging banks close a branch, the number of small-business loans made in the area fall by 13% for more than eight years afterward.
“There is a very tight relationship between business lending and branch locations,” Jason Richardson, director of research at the National Community Reinvestment Coalition, told Banking Dive in February. “Part of that has to do a lot with the way that business lending works, where a lot of it is very relational. Business owners get to know the manager or the business specialist at a local branch.”
That in-person interaction between a small-business owner and a banker can be hard to replicate digitally, said James Angel, professor of finance at Georgetown University’s McDonough School of Business.
