As the threat of a second COVID-19 wave draws closer, the balancing act between digital convenience and human interaction within the banking world has been amplified.

Financial institutions across the country are faced with the question of how to optimize branch networks during a time when people are encouraged to socially distance, and the solutions for what to do with existing real estate vary in approach.

WaFd’s showroom strategy

WaFd President and CEO Brent Beardall is questioning what to do with the Seattle-based bank’s branches that span eight western and southern states. “Ninety-nine percent of our banking transactions happen virtually, so the need for branches — and we have 230 branches — you question the need of those,” Beardall said.

Despite the 9% year-over-year increase in digital transactions, Beardall said branches are still important because people use cash and, until the industry can completely phase it out to digital form, branches will continue to evolve.

From Beardall’s perspective, WaFd branches will evolve into showrooms, much like car dealerships but for banking products, with a help desk. “No longer do you just come to a bank for those routine transactions, those need to happen through automation,” he said. The bank, which has more than $16 billion in assets, is taking an iterative approach to achieve a hybrid model in which the branches support the digital relationships rather than digital channels supporting in-person banking.

Citizens evolves its distribution channels

Citizens Bank Chief Experience Officer Beth Johnson is rethinking the branch as a key part of the distribution channel of the future.

“Historically, banking was very branch-centric and now it’s becoming more balanced in a view across the different channels,” Johnson said. “You need to be thinking about the branch and how they interact with your other channels, to start in one channel and end in the other, so to me that is going to be the critical component.”

Johnson anticipates branch volume to permanently decrease by about 20%, prompting her to consider changing the interaction model in the branches. “They’re going to become more advice-centric, leveraging less staff in a particular branch but enabling that staff to be qualified and able to have really in-depth conversations with their customers,” she said.

Citizens, which has close to $180 billion in assets and operates more than 1,000 branches in the U.S., also accelerated the launch of a digital engagement tool that customers can use before coming into a branch so both customers and tellers can be well-equipped to address the relevant issues.

“Over time, you will start to see branch count in the U.S. go down and the type of branch change, square footage of what you need will start to shrink,” Johnson said. “But I do think COVID will accelerate selective and smart branch closures in the network, and then for digital to work in concert with that for those day-to-day interactions you’re using your phone. You need enough brick and mortar in the right places.”

PenFed’s operational tweaks

At Pentagon Federal Credit Union, the reinvention of the branch addresses operational obstacles that arose during the pandemic.

“We have been able to be flexible in our work capacity as needed,” said Monica Brooks, director of branch operations at the $25 billion credit union. “In the beginning [of the pandemic] there was a slight dip in people [visiting branches], not wanting to leave the house, and so we were able to implement what we call a ‘hybrid structure.’”

PenFed, which has branches throughout the U.S. and at military bases in Guam, Japan, Portugal and Puerto Rico, reassigned branch employees at the start of the pandemic. About half jumped on to support inbound calls to the call centers and the other half were responsible for drive-through and lobby traffic.

While in-branch transactions dropped to 1% from the typical 5% of total transaction volume, Brooks said member traffic through the branches remained relatively consistent. “Financial centers are one of three mission-essential places you can go … we have been the lifeline for many of our members who have come out to start to get some sort of normalcy back to what they can do,” she added.

Brooks anticipates the bank’s approach to staffing branches to continue after social distancing measures are lifted, noting the credit union has no plans in motion to cut back its branch footprint.

Fifth Third’s next-gen centers

The pandemic hasn’t prompted the $203 billion Fifth Third to change course on upgrading its 1,100-plus branches into what the bank calls “next-gen branches,” according to Howard Hammond, head of retail for the bank.

The Cincinnati-based bank is staying the course on a strategic decision to consolidate branches in its legacy markets but will continue to invest in the Southeast, specifically renovating branches to create modern, open spaces with more opportunity for interaction. A renovated branch might resemble an Apple store more than a typical bank branch, Hammond added, and the focus on technology will be evident. Tellers will have tablets, there will be video boards for presentations and in-branch seminars on digital tools, he said.

See also: 80% of Americans don’t need a bank branch, Plaid data finds

“What we’re looking at with our next-gen financial centers, we think people will still want that personal connection,” Hammond said. “Branches are still here to stay, but they’re going to be smaller, they’re going to look different, more welcoming, and they will be places where our clients come to discuss those big financial decisions or get help and guidance.”

While the future of the bank branch remains uncertain, it appears likely that the pre-pandemic branch will be an emblem of the past.

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