After two years of COVID-19, entire industries have risen, limped along or pivoted as best they could alongside ever-changing and largely unpredictable trends. 

Those industries providing a service people need no matter the state of the world had no choice but to adapt as quickly as possible. And some of them, like banking, actually had a little bit of a head start, as the pandemic exacerbated trickling changes that became a veritable deluge as a global health crisis ebbed and flowed, shaping consumer habits along the way. 

Well before COVID entered into common vernacular worldwide—more than a decade earlier, in fact—banking clients were already spending less time inside their financial institution’s branches and more time utilizing their digital options. But the pandemic absolutely set a dramatic shift toward virtual banking in motion. 

“From the year 2010 to pre-pandemic, most retail branches experienced a 30% decline in walk-in traffic,” notes Raamie Ibrahim, Axiom Bank’s SVP, retail banking. “Since the pandemic, we’re seeing decline rates as high as 70 and 80% from those 2010 numbers.”

Ibrahim cites health concerns, especially fear over COVID exposure, as significant contributing factors in that precipitous drop. But such an abrupt change in client habits also forced banks of all sizes to reconsider their digital banking options to give clients the support, tools and security measures their increasingly online habits merited. As banks developed, broadened and refined their virtual capabilities, they’ve made themselves more accessible to remote-banking clients, and the shift online became an even easier and more attractive option. 

Sharon Barry, vice president of member experience at Orlando Credit Union (OCU), notes that credit unions tend to operate a little differently than commercial banks, with OCU having such a “high-touch” customer base that its doors have stayed open all through COVID. But she’s still seen firsthand how quickly digital banking became a must-have for any financial institution. 

“Our credit union had already started working on digital transformation pre-pandemic but all of a sudden, it was ‘We’ve got to get moving,’” she notes. “We had already instituted a good online banking app before that, but we stayed open throughout the pandemic because so many of our members wanted to come in to do their banking. Even though we’ve been working toward digital and educating our members about their options, different people handle their banking differently, so we were still providing services to those who want to do their banking in-person. But the pandemic did shift mindsets, for sure, and pushed people more into the digital space.” 

Whether it springs from clients not fully trusting their savings with online security, a lack of interest in making the switch or simply preferring a little human interaction with their deposits and withdrawals, there will always be those technologically wary clients or late adapters who resist going digital. It’s one of the reasons why brick-and-mortar banks might dwindle in numbers but they’ll never completely disappear, experts say.

“Over the last 20 years or so, the banking industry has evolved to meet the shifting preferences of consumers, who increasingly are utilizing digital channels to meet their financial needs,” notes David Pommerehn, Consumer Bankers Association’s general counsel and senior vice president. “That said, many customers of both large and small banks still value branches and the personal touch they provide. 

“Branches are also smarter now,” Pommerehn continues. “A lot of them are pivoting away from the teller lines and the back-office rooms where loans are made and moving to smart ATMs and fewer tellers. But I don’t think you’re going to see a great diminishing of the branch networks in the country anytime soon. I think you will see more online, multichannel ways to deliver to consumers. They have a branch network, they have an online presence, they certainly have call centers all serving the needs of hardworking families and small businesses.”

Staving off security breaches is obviously of paramount importance as banks gravitate more and more to the digital sector, but it’s still a mighty undertaking for smaller institutions. With hackers, identity thieves and other malicious entities always seeming to be practically in lockstep with the latest and greatest in digital security advancements, it’s an ongoing challenge for smaller, local banks to provide state-of-the-art monetary protection that doesn’t inhibit clients from handling their own information online. 

“Banks have to comply with data and security laws that are very specific to banking institutions,” Pommerehn explains. “Banks take that very seriously, with the amount of fraud that ensues in today’s online environments, how easy it is for people to get scammed and how easy it is to find people’s information online. But how do you provide that type of data security and privacy for consumers in a way that doesn’t cause so much friction that they can’t easily navigate their financial needs?”

He likens the situation banks are facing to how Amazon has streamlined its buying process. “You click on your product, you hit ‘Buy Now’ and then a product shows up at your door two days later. You don’t have to enter in your information, it’s already preloaded. But all that information is sensitive information that has to be secured. … That’s what banks are challenged with now, too. They want to make it effortless for consumers to go online and check their account balances and to be able to apply for a loan in a matter of minutes.”

But it’s the cost of doing business, and a problem banks will have to resolve to not only retain clients but also continue to earn the loyalty they’ve spent years—and sometimes generations—winning. 

“It is the only way we can stay relevant,” Ibrahim says. 

A key asset that smaller, community-based financial institutions have on their side is a strong client connection. For hyper-local banks that don’t have their national counterparts’ resources in their corner, leading customers to them isn’t always an option, but meeting potential clients where they are certainly is. Attending community events, shaking hands and developing first-name-basis relationships is a low-cost, high-yield effort that showcases where a community bank’s true advantages are—and will continue to be as banking’s digital age makes personal connections all the more novel. 

“One thing that Axiom, I think, does better than most is that the communities we have financial centers in, we are active members of those chambers [of commerce], Rotary Clubs and a couple not-for-profits,” says Ibrahim. “Each one of our branch managers are donating at least six hours of their time a month to community development. It’s important that we stay visible within our communities.” 

Developing new relationships and deepening previous ones will be crucial as branches strategically consolidate and remaining locations need to understand exactly how to provide the best of all worlds to their clients, especially as the financial technology sector is poised to present a new area of competition by harnessing technology for a faster and more 

efficient approach to traditional financial services.

“The fintech space is really interesting,” Pommerehn says. “Financial technology companies like Chime and those types of products are going to grow. As a result, banks have responded by investing in digital innovations to meaningfully compete for customers in this new competitive landscape. While some consumers may find the ease and convenience of fintech products appealing, these companies are not subject to federal oversight from prudential regulators like the CFPB, depriving families of the high level of protections they’ve come to expect from their bank.”

A diminished reliance on the human touch means bank employees will have to wear a number of different hats, becoming generalized financial advisors who can provide an array of insights and guidance to clients who do want to speak to another person. If COVID or other large-scale health concerns become a reality we have to learn to live with, the safety of those essential economic workers will also shape the future of consumer banking’s in-person services. 

But, for now, experts say any kind of large-scale overhaul is still beyond the horizon.

“I think it will remain largely unchanged going forward, to be honest,” Pommerehn says. “I think branches will still exist. They’ll just be smarter, more planned-out in where they’re located and the services they offer, and then determine what services can be offered in the branch or deflected to online activity.” America’s leading banks remain fully committed to providing the best financial experience available, whether at a branch or on an app.

Those locations that remain will be strategically selected to ensure that no community is left without a local banking service. Because if one thing won’t change, it’s consumers’ appetite for individualized, immediate service—or financial experts’ desire to provide it. 

“We’ve always been very member-focused,” Barry says. “Right before the pandemic, we changed to a state-chartered credit union and added four new counties … that gave us more opportunities to provide the services that financial institutions do. You have to win people’s business. You have to offer products and services that really meet their needs. You do that by truly understanding their financial position and financial goals. When you have strong ties to that community, they know you’re making decisions in their world.” 

“One of our core strategies is to provide a true concierge service, working with one individual for all your financial needs,” Ibrahim says. “I think where some of the bigger organizations struggle is they’re too specialized, so a client might have to talk to six or seven people along the way. It’s really hard to build relationships when someone keeps getting passed around until they reach the right department, so we’re developing a one-and-done solution: The person you’re talking to today can take you from Point A to Point B without getting anyone else involved.”