- Brian Moynihan, CEO of Bank of America, and Jennifer Piepszak, CFO of JPMorgan, spoke at the Barclays Global Financial Services Conference on Tuesday about the increasing reliance of customers on digital banking tools.
- Moynihan said the pandemic had accelerated already burgeoning digital trends by a year or two.
- And Piepszak suggested savings in real estate costs that could impact the future of the physical locations.
- Data suggests trends in mobile and digital banking growth during the coronavirus pandemic as consumers increasingly demand contactless and remote banking solutions.
- You can find more stories on the Business Insider homepage.
Top executives at the two largest US banks by asset have seen a surge in digital adoption among their retail customers during the coronavirus pandemic. And that shows how carefully they think about their sprawling networks of physical branches.
Brian Moynihan, CEO of Bank of America, spoke at the Barclays Global Financial Services Conference Tuesday. and Jennifer Piepszak, CFO of JPMorgan, both mentioned the increasing reliance on digital banking instruments.
In their remarks, there were signs that the surge in digital adoption could change the way the two companies feel about their retail presence. JPMorgan Chase operates approximately 5,000 physical branches in the United States, and Bank of America has approximately 4,300 branches.
Digital banking tools are unlikely to turn brick and mortar branch networks of this size upside down – but they could affect them in the long run.
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"Paperless hits an all-time high," said Moynihan. He noted that up to a fifth of first-time users of mobile checks were boomers and seniors, showing how digital tools are now permeating groups of users who were previously not as engaged.
Overall, the pandemic "likely sped up a year or two, which of course would have" in terms of migration to more digital banking habits, he said.
That's not surprising as the pandemic has been a major catalyst for food adoption, from grocery delivery to digital banking.
An example of how drastically customer behavior has changed as habits have changed is the use of ATMs and bank tellers to withdraw money.
Moynihan found that cash withdrawals from ATMs and bank tellers have declined about 10% to 12% since last year, although the bank's overall money movement has been flat to slightly higher.
It's a sign, he said, that "people are getting less of the industry" and are turning to alternatives to mobile verification instead.
Working from home has taught bank employees the importance of working digitally
JPMorgan Chase's Piepszak suggested that the advent of a near-ubiquitous work-from-home policy has drawn other important lessons for the company from its digital adoption, some of which could have implications for consumers.
"It's very intuitive and logical to think that there should be some benefits," she said, "given all that we learn about the things we can work on from home with so many of our employees."
Additionally, Piepszak pointed to the possibility the bank could reduce its spending on its physical footprint, noting, "There are potential real estate savings that we could realize."
Regarding JPMorgan's bank branches, Piepszak suggested that the bank is still on hold.
"We are learning a lot, and there is still a lot to learn," she said, despite realizing the company could potentially accelerate plans to shut down stores in certain markets.
When asked about ways to close certain branches, Moynihan of Bank of America stated that "it always depends on where the customer is going at any given moment," adding that we will open branches in the markets we do where we need it "and that the bank is likely to have fewer branches in some markets.
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How the pandemic accelerated digital banking trends
Against this background, there have been indications of an impending fate for physical bank branches for years, but these never occurred. Although mobile banking has skyrocketed in recent years, it has yet to completely dismantle the physical branch.
Some banks have actually relied on branches in recent years to attract more retail customers – and their deposits – in markets where they wanted to grow. JPMorgan, for example, announced plans in early 2018 to add 400 new offices in 15 to 20 new markets over five years.
However, the coronavirus has proven to be a great catalyst for customers interested in digital banking.
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In April, JDPower released the Results of a survey It turned out that almost a third of the customers of retail banks conduct their banking transactions exclusively with digital tools. According to the JDPower survey, the increasing acceptance of digital banking was not all positive.
This survey found that exclusive digital banking customers were generally less satisfied than their peers who rely on branches for their banking operations.
On Tuesday's call, Moynihan referred to a statistic that suggests why companies have traditionally leaned into the branch of a physical bank.
Bank of America had around 1,400 branches in 1999 after the merger with Nations Bank. Today, the physical branch network has more than tripled to 4,300 branches, he added – which was linked to massive deposit growth from $ 400 billion 21 years ago to $ 1.7 trillion today.