Bank and credit union branches: what does the future hold in the new normal?

Jack Reinelt, President of the Americas
16 November 2020

The future of bank and credit union branches has been a hot topic for months, fuelled by media coverage of COVID-19 induced closures sweeping America. In June alone, there were more than twice as many bank branches shutting down as there were openings. On the surface, it doesn’t look good for what used to be a beacon of our main streets and shopping malls. 

But scratch beneath that surface and you’ll find a different story. Planned branch closures were happening well before the pandemic hit as consumers steadily shifted towards digital banking. In July the trend reversed with more openings than closures for the first time in 9 years. Similarly, credit unions, (who aren’t required to file permanent closure notices unlike their banking counterparts), also managed to weather the storm.

So talk of branches disappearing forever seems a bit premature. And COVID-19 hasn’t led to the mass culling that many naysayers were perhaps predicting. A more accurate status is that branches have been on a journey of evolution for years. COVID-19 has just made them put their foot on the gas.

So why are branches still relevant? 

There are lots of reasons, but they boil down to a need for human connection. People prefer the personal touch that branches offer when it comes to more complex financial matters. A recent study of 1,100 US consumers by research firm Simon-Kucher & Partners* revealed that 69% would rather be in a branch when applying for a mortgage; with figures at 57% for opening a savings account and 53% for opening a business account. With the Federal Reserve dropping interest rates to zero in March, mortgage lending has seen a post-pandemic boom, particularly in credit unions, which further highlights the importance of the branch for facilitating major financial arrangements.

But branches are vital for fulfilling everyday banking tasks too, especially for consumers who need practical assistance, like older citizens or those with accessibility issues. And in the same survey, when answering the question of what they’d do if their local branch permanently closed, more people chose ‘move to another bank with a local branch’ than 'switch to a neobank', or 'do nothing'. What’s surprising is that this trend was virtually consistent across all age groups including both the 18-24s, who you might not have expected to respond in this way, and the over 45s who you probably would have.

Credit union branches have also become important community hubs, helping members to seek specific advice, learn how to use online and mobile banking tools, or even provide meeting spaces for local organizations. Greg Michlig, from CUNA (Credit Union National Association), reiterates the importance of the physical branch and points to its growing evolution. “There’s always been a desire for credit unions to continue to have that in-person presence.” Indeed, CUNA’s membership is more in favor of “repurposing” branches instead of closing them.

Redefining the in-branch experience

So how are banks and credit unions evolving their branches to cope with the concurrent challenges of shifting consumer habits and COVID-19? Before we look at examples, it’s worth highlighting that the pandemic has forced many brands to adapt or even radically alter their pre-pandemic strategies to address things like public safety, staffing, and opening times.

Self serve for customers saves time for staff

Most banks closed their lobbies and introduced drive-through services at the height of lockdown. A few even added online booking tools like Pittsburgh-based F.N.B., to help manage the volume of customers wanting an in-person meeting. 

From receiving just 21 appointments in January F.N.B logged over 2,700 appointments in April which they were largely able to manage despite having restricted physical branch spaces. This action reduced customer friction and waiting times, meaning that agents could be prioritized for the right calls. Somo applauds this form of simple digitization as only last year we developed a tablet system for HSBC that was rolled out in 10 global markets. It transferred manual paper-based tasks online, freeing up floor staff to focus on higher-value consultations, and is something we know has proved invaluable over the last 6 months.

From mobile units to mobile banking

As the lockdown cocktail of closures and restrictions mounted, Bank of America brought some branch facilities closer to customers through its 12 mobile units (both Financial Centers and ATMs) – directed to the locations that needed them most. But just as important, they invested in further enhancing the functionality of their chatbot, Erica, in order to maintain customer service levels during the pandemic. 

Erica was launched in 2018 and had 9 million users at the end of last year. But this increased rapidly to 14 million by May 2020 as people used it for everyday tasks like requesting payment deferrals, tracking their spending habits, getting bill alerts, showing recurring charges, and updating their card information. This surge in users was driven by their digital team adding 60,000 COVID-19 related terms to the AI platform to improve customer experience and reduce the burden on branches and call centers.

Community matters

Bank and credit union branches have always been an integral part of the local community, especially in suburban areas. Last year Capital One ramped this up by introducing over 30 coffee shop-style branches offering a more independent, personal experience. Customers could enjoy local food, Peet coffee, free WIFI, meeting spaces; as well as ‘digital lifestyle coaches’ on hand to help them with their online banking queries. This experience demonstrates the art of the possible for in-branch innovation and while the bank cafes temporarily closed after lockdown, they’re gradually reopening again now.

Other players have followed suit during the pandemic with their own community innovations. Like NYC based Dime, which provided education and how-to guides to help customers use its online banking service as well as a relationship banker outreach program to support small businesses and consumers most in need of banking assistance. And U.S. Bank, which established a virtual employee volunteer network to provide remote and face-to-face support for nonprofits and community causes.

What next for branches in the new normal?

The common thread running through all of these initiatives is a more visible, albeit rather belated, customer-centric approach. Because it’s clear that consumers have the power to vote with both their feet and digital devices if their needs can’t be met, even during a crisis. Banks and credit unions should also be wary of the threat of the tech ‘outsiders’ who continue to delve into financial applications, like Google, Facebook, and of course, Amazon. The e-commerce giant already has Amazon Cash, Amazon Pay and not to mention Amazon Go, the world’s first checkout-free grocery store – a type of experience that could be an alternative to branches in the not too distant future. 

So perhaps we should commend JPMorgan Chase, who’ve suffered their own fair share of closures this year, for its commitment to being customer-first over the long haul. According to their CFO, Jennifer Piepszak, America’s largest bank is sticking to its plan of opening 400 branches in new markets by 2023 while most of its competitors are shifting away from branch expansion. "We're not going to make any big changes quickly because we want to make sure we have the benefit, over time, of watching our customer behavior, so they can really be the ones that inform our strategy”. Let’s hope for all our sakes that they stay true to their word. 

If you'd like to discuss any branch transformation or digital product requirements, please contact me at

Somo is a global digital product agency with offices in Charleston, SC; Washington, D.C.; Detroit, MI; as well as London, Bristol, and Medellín.

*Simon-Kucher & Partners survey data pulled from