The Financial Branch, January 29, 2020: 5 Reasons to Think Twice Before Closing Branches
Cold economics shouldn’t be the only basis bank and credit union leaders use to decide which branches to open and which to shutter. Financial metrics ignore an institution’s role in a community, the reassurance a local office gives consumers, and the fact that many consumers still like branches in spite of easier digital channels.
While many financial institution branches may not be profitable on paper, bank and credit union leaders should think carefully before closing the doors. Even in the digital age, branches remain a critical channel for many consumers. Closing too many branches too quickly in some areas could lead to bad public relations, brand damage, angry consumers and business customers, and other nasty surprises.
“When local branches close, those relationships are lost, resulting in the loss of credit that local businesses need to thrive,” said Jason Richardson, Director of Research and Evaluation at the National Community Reinvestment Coalition.
Banks and credit unions shouldn’t look at branches as standalone channel. Instead they should determine how they fit into the overall digital transformation strategy.
