Many more bank branches might close in the aftermath of Covid-19

Since the Covid-19 outbreak, more people have turned to mobile banking. As a result, the number of transactions through the mobile channel saw a big leap. Commercial banks are beginning to review their branch strategies and how to adjust to changing customer behaviour.

Siam Commercial Bank (SCB) president Arak Sutivong said it was expected, after the Covid-19 crisis ends, that many commercial banks would reduce the number of physical branches due to the changing customer behaviour, which is considered an important catalyst. In the past three years since the announcement of the SCB Transformation Strategy, he said the bank had closed many traditional branches. Currently, there are a total of 911 branches, but the bank has added other touchpoints such as SCB Express, which focuses on providing services via automated machines, or the SCB Investment Centre Wealth Management Centre, which focuses on financial and investment consulting, etc.

The number and rate of reduction of physical branches would depend on many factors, he said, adding the bank would use service satisfaction and customer experience as important factors in determining the design of the network and the service channels of the bank.

The bank focuses on providing omni-channel services in which customers can choose to use the service from their preferred service channels whether through a bank branch, through partners such as 7-Eleven, or via digital channels such as SCB Easy, he said. Overall, even though the number of bank branches may be reduced, access to financial services would reach more customers, he added.

Kasikornbank (KBank) senior executive vice president Wirawat Panthawangkun said the bank still gives importance to a variety of channels or "various platforms that customers can use for convenience". He said customers still used both channels -- physical branches and the digital medium.

"The bank's approach is that we will lean towards service channels by having the right number of branches through consolidation so as to maximise productivity and resources, including staff. Employees will pool at the branch and a new plan will ensure there are no layoffs. At the same time, the bank will accelerate reskilling of employees to be ready to handle new jobs, and enable employees to create value for themselves and the organisation in the future."

Thakorn Piyapan, Krungsri's head of Krungsri Consumer Group and Head of Digital Banking and Innovation Division, believes that branch channels are required for face-to-face service, which builds relationship with customers in ways that online services cannot, such as by talking, giving advice, providing detailed information. "Face-to-face service is still needed. But some transactions should be pushed to online as much as possible, such as bill payments or money transfers, because they can be done through mobile phones. But some customers still want to do their transactions at the bank. After the Covid-19 crises, we must wait to see how much public behaviour changes," Thakorn said.

Bangkok Bank executive vice-president Thaweelap Rittapirom said that in the future, the number of commercial banks' branches would gradually decrease in line with economic conditions and consumer behaviour. However, they are still considered necessary because branches are a channel of communication for everyone at all levels to have access to financial services such as during the Covid-19 pandemic. The branch is a necessary channel that can help customers in need of financial services or get help from various government measures.

Naris Sathaphondecha, the senior director of the TMB economic analysis centre, said that at the end of March, there were 6,436 branches, down 72 from the end of 2019.

Of the five major banks, SCB had shut the most number of branches -- 113 -- compared to the same period last year, followed by Krungthai Bank (54), Kasikornbank (40), Bangkok Bank (15) and Krungsri (11).

After the Covid-19 crisis, the number of branches and ATMs are likely to decrease due to customers increasingly opting for mobile banking. Traditional banking will rarely be used for standard transactions such as deposits, withdrawals, funds transfers, and payments, but more complex financial services will still be available in physical branches.