Bank / Credit Union

Bank visibility is key in determining branch closings

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August 3, 2020

As the aftereffects of the pandemic across the country come to light, bank customers may find branches that were temporarily closed may not reopen depending on the branch's visibility, marketability and customer convenience, according to a Globest.com report.

"Banks pay the second-highest rent per square foot — right behind pharmacies," Noah Shaffer, senior director of asset management for Confidant Asset Management, told Globest.com. "There's really no rhyme or reason to it. They're saving money because they're closing three locations and keeping the highest-profile one open. But those three are never going to reopen."

In the past, banks were a destination for people. Every community had at least one and people traveled to a branch to do all their banking. Now, according to Shaffer, it's all about convenience and visibility for the brand.

"If a bank is paying $150,000 in rent, the exposure can be worth it," Shaffer said. "You're basically paying marketing dollars. People are seeing your bank branch in their community as a symbol of community involvement. The customer experience must be streamlined and flawless once a customer enters the bank. Otherwise, they will refuse to come back, or change banks. And then there will be consolidation in this sector."

Schaffer said it's not only how much in deposits that a bank does that could determine whether or not it's profitable, but where it is located.