As I See It: Terry Murden
It will come as little surprise that the Covid-19 lockdown is accelerating the take-up of digital banking, a trend that the banks say is a reflection of customers feeling “more confident “about using online and mobile channels. That may well be the case. On the other hand, it could be a catalyst for a new round of branch closures.
Virgin Money – also still trading as Clydesdale – and Bank of Scotland have put planned closures on hold, at least providing a reprieve to communities affected. Once the economy gets back to anything resembling normality the gloves will come off and the banks will see the wider adoption of digital banking as the perfect excuse for a resumption of their planned programmes.
Recent research by Virgin Money revealed that more customers were downloading mobile banking apps to undertake a range of checks and transactions. The digital adoption rate for current account customers in April showed the largest monthly increase it has ever seen and average daily mobile app log-ins increased by almost 10%. Paul Titterton, head of personal distribution, said that “having now got familiar with it and seen the benefits, many intend to carry on using it in the future.”
That sounds more like a mission statement for the bank.
It is not alone, and the trend is not restricted to the UK; it’s worldwide. The Wall Street Journal reports that US customers are visiting bank branches less frequently during the coronavirus pandemic and it reaches the same conclusion: that it could speed up some banks’ plans for shutting them down.
Branch traffic in the US fell more than 30% in April and the first three weeks of May compared with the same period last year, according to Novantas, a financial services research firm. Teller transactions dropped 32% in March and April compared with the same period last year, Novantas said.
All banks have been arguing for time that customers are switching to digital banking and that this has reduced footfall in branches and their viability. Critics say the shift has been driven not only by customer demand but by the banks themselves making access to branches more difficult, even access to some products which have been limited to online customers.
There is no doubt that customers, particularly young customers, are drawn increasingly to the convenience and speed of digital banking, notwithstanding the regular lockouts. As IT systems improve, aided by developments in fintech, this shift will accelerate. Banks were already facing a need to keep up with the digital challengers: Monzo, Revolut, Starling and others which are gaining young customers at a faster rate.
The current pandemic has, by necessity, driven both sides down the digital route. As noted by the website Finextra, those who once resisted online banking have been forced to adopt digital banking apps as their new default. The more these customers realise how convenient it is to bank digitally, the less likely they are to go back to physical branches.