German banks are closing more and more bank branches – the European competition is much more cautious when it comes to thinning out branch networks.
(Photo: dpa)
Frankfurt While some German banks are planning a significant reduction in branches, the financial institutions in other countries want to largely maintain their branch network after the corona shock. When the pandemic reached Europe in spring 2020, banks had to react quickly. Branches were closed and employees were sent to work from home. The management consultancy Roland Berger asked European banks about the trends in private customer business for a study.
The result: In the pandemic year 2020, 58 percent of the banks surveyed had to temporarily close some of their branches. However, there were only permanent closings at 11 percent. For the short and medium term, too, 80 percent of those surveyed assume that only a small proportion of their branches will be closed.
The picture is different in Germany: Here the number of bank branches has already declined significantly. The consulting firm Investors Marketing estimates that the number of Branches by a third to 16,000 by 2025.
At the end of 2020, the Bundesbank registered a good 24,000 branches. Fifteen years ago there were almost twice as many. According to a study by the KfW development bank, France has the highest branch density in Europe with 5.3 branches per 10,000 inhabitants. With a value of 3.2, Germany is in seventh place, which corresponds exactly to the average in the EU.
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Roland Berger partner Sebastian Steger sees several reasons for the different trends in branch closings in Germany and Europe: On the one hand, there is the significantly lower profitability in the German private customer business. “As a result, there is also greater pressure to save in this country,” says the consultant.
A study by McKinsey from this summer shows that private customers in Germany only pay an average of 135 euros for everyday banking services. The European average, on the other hand, is 256 euros. While the income of the domestic financial institutions in the private customer business fell by twelve percent in the ten years to 2020, according to a study by the ZEB consultancy, they increased by over 20 percent in Great Britain and Spain. In Sweden and the Netherlands the increase was even over 60 percent.
Comparison platforms compete with the banks
As a further reason for the faster branch closings in Germany, Steger cites the fact that sales models via comparison platforms and their online advisory services are already more widespread. While the share of such platforms in the sale of installment loans or mortgage lending is still around five percent in southern Europe, the comparative value in Germany for new business is 30 to 40 percent.
“The results of the study suggest that the European banks have found a kind of balance in terms of branch density, at least for the moment,” says Steger. But that will certainly change again in the medium term. Steger expects fundamental changes in the private customer business in the coming years.
In part, these changes can be traced back to the pandemic: Around 90 percent of the banks surveyed believe that a quarter to half of the workforce in the European private customer business will continue to work from home even after the corona crisis. In addition, over 60 percent of the institutes want to create agile working conditions for selected areas or projects. According to Steger, this will change the future employee profiles significantly: away from the classic project manager to the specialist in data management.
According to the study, over 80 percent of the banks surveyed want to continue to act as a central analyst for end customers in the future. In Steger’s opinion, however, this is unrealistic. “Not all banks that want this today will be able to defend their role as customer experts,” the consultant predicts.
In the end, many would have to concentrate on the role of product developers and producers; contact with customers and sales would then be handled by other platforms. Or a smaller number of banks that could assert themselves in the digital competition.
More: Bankers prefer to stay at home: Banks and workforce are vying for the right to work from home