Singapore branch closures accelerate digital push

On April 3, OCBC Bank in Singapore announced it would temporarily close 22 of its 46 branches for a month in response to falling use amid the Covid-19 outbreak. The bank urged its retail and SME customers to use digital services.

UOB, Citi, Maybank and other consumer banks are beginning to follow.

Although OCBC’s closure is temporary, it will be interesting to see to what extent high-street banks decide to reopen all of them, and what kind of traffic they will experience once the coronavirus crisis has ebbed.

The bank is participating in a forced experiment of human behavior. A lifetime of habits – of going to branches to bank, and of using ATMs to access cash – is being abruptly challenged. When consumers who prefer a bank branch are forced to turn to their computer or phone to get service, will they switch back?

Not surprisingly, digital usage is already surging.

Sunny Quek, head of consumer financial services, said in an announcement: “During this period, we have seen a higher number of customers using our digital solutions. For example, we have seen 35% more fund transfers performed digitally during this period.”

The bank notes that many transactions can now be performed on its mobile banking or internet banking platforms, and in some cases at its ATMs. Quek says nine in 10 financial transactions can be performed digitally, from home loans to wealth management. The bank is now extending its mobile services into Mandarin as well as English.

OCBC says it will ensure there remains enough cash in its network of 1,200 ATMS and those branches that remain open. The cash economy won’t completely disappear – cash can still have its uses – but it is hard to imagine it returning to 2019 levels, particularly in a society already as digitally oriented as Singapore’s.

So far Singapore’s banks have closed branches in Hong Kong and Macau, but not at home. In early February, OCBC Wing Hang Bank shuttered six branches in those cities, while UOB closed three of its corporate branches in Hong Kong (where it has no retail business) and in Shanghai and Beijing – but none in Singapore. Bank of East Asia, HSBC and Standard Chartered have also closed some of their Hong Kong branches.

The biggest branch operator in Singapore is DBS, as it also operates the network of POBS (Post Office Bank of Singapore), which it acquired in 1998. POBS branches serve the more suburban neighborhoods, so may be harder to close in the short run – although arguably migrating this customer base to digital would deliver them even greater benefits.

DBS has not announced its intentions regarding branches, but the trend has turned. Shortly after OCBC’s announcement, Citi also announced it would temporarily close four of its branches in Singapore and Maybank said it would follow suit.

The lack of branch closures in Singapore appears calculated to stay aligned with the Singapore’s government’s approach to Covid-19, which has encouraged business to continue where possible, with schools open and the government discouraging widespread use of face masks. Singapore has relied instead on a technocratic approach of widespread testing, tracing, and quarantines.

But cracks have now appeared in that strategy, with a rise of new infections that evaded surveillance. Now the government will be closing schools and taking a sterner line on social distancing – which means less foot traffic in bank branches.