As Banks Readjust to COVID-19, Some Branches Look to Close

Two major bank branches announced they will be closing in the downtown neighborhoods this week, marking a potential trend as people move more to online banking and cash-less living, but industry insiders said they expect it to be a short-term re-alignment.

The Hingham Institute for Savings announced last month it would be closing its long-time Beacon Hill branch on Charles Street, getting approval this month from the Division of Banks, but said it would keep its South End branch open on Tremont Street to handle in-person visits.

Meanwhile Cambridge Trust Company put in an application to the Division of Banks this month to close its long-time, anchor branch in on Tremont Street in the St. Cloud building. That branch has been in operation for years, and the loss would open up a huge hole in the heart of the South End business district.

Cambridge Trust did not return an email looking for information on the closure, which hasn’t yet been approved.

That said, Hingham President and Chief Operating Officer Patrick Gaughen said they have no intention of leaving the South End. He said the closure on Beacon Hill was a trend uncovered through COVID-19 that banks lighten up on the numbers of branches as more people of all ages use online banking.

“We’ve been in the South End since 2006 and we will be there permanently,” said Gaughen. “As we close our Beacon Hill office, we are consolidating our services for all of our Boston customers in the South End office…I think banks are generally finding that we can serve a broader geography because of the uptake of digital banking tools and the declining use of cash.”

Daniel Forte, director of the Massachusetts Bankers Association (MBA), said the consolidation in geography, especially in cities, is to be expected. He said the expansion of branches over the last several years has led to far more branches from far fewer banks.

“We’re up about 7 percent on the numbers of branches in the last 25 years despite the fact that the number of banks has consolidated by 47 percent,” he said.

He said he doesn’t expect any significant shift or bank branches fleeing business districts in huge numbers, but he said they do expect some re-alignment as businesses come out of COVID-19.

“I don’t think it will be significant,” he said. “You might see a 10 percent consolidation in branches over the next five to 10 years. I think you’ll see changes in the branches though as well – in the technology and how employees there are used.”

He said he expects branches to move away from employees that are just tellers and just processing transactions. With online banking prevalent, more banks offering electronic check processing and more ATMs, branch employees will likely be tellers, advisors, customer service specialists, lending agents and a friendly face too.

“Even seniors that have a higher propensity of visiting a branch in person did an excellent job of recognizing you can do 90 percent of retail banking online,” he said.

“Electronic banking will be our future, but branches will remain important and recognizable from a branding standpoint,” he added. “When branches are built or remodeled, they will be smaller and smarter than they have been in the past.”

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