Banks may close branches

[Gaybutton]

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

May 7, 2020

The Covid-19 pandemic has compelled changes in consumer behaviour, and it remains to be seen if these changes will be the "new normal". One of the areas of behavioural change is in the use of financial services.

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.

Story and graphics: https://www.nationthailand.com/news/30387390

[gerefan]

Never miss the opportunity of a mega-crisis to make redundancies, cutbacks, closures in the name of “efficiency”, even in Thailand!

And ...” Traditional banking will rarely be used for standard transactions such as deposits, withdrawals, funds transfers, and payments,”...

Well tell that to the less affluent who will want to continue using banks in exactly that way! For example motorbike taxis who deposit money during the day in order to avoid carrying it on them and risking “losing” it, and small restaurants and other business which bank money at the end of play every day.

[Jun]

It's efficiency and productivity improvements that have lead to the higher living standards we all enjoy today. Remember, once upon a time, the Luddites were smashing looms due to the lost employment in the fashion industry.
In practice, the displaced people usually find alternative employment and living standards rise as a result of the improved productivity.

The same principles should apply in financial services. The benefits of efficiency improvements should flow through to the customer, providing of course there is effective competition in the market. Unfortunately, I have doubts about the latter point in Thailand.

There are examples of new technology and competitors reducing the cost of financial services elsewhere.
For example:
1 The cost of stockbroking has reduced due to online trading and I believe Charles Schwab offer zero trading costs.
2 Transferwise offer fast & low cost overseas transfers.
3 My "Starling" branchless bank account offers almost loss-free overseas cash withdrawals and contactless transactions. So I can use this in most of Europe with almost no losses. Obviously not cost effective in Thailand, where the banking cartel would charge 200 baht or whatever it is for cash withdrawals. However, the problem there is corruption, not technology.

Which brings me to another point, when cash dies out, any tea money paid via a bank transfer would become traceable. I expect there to be some resistance to Thailand going fully cashless. Banks will be needed to handle all the bribe money.