Analysis from Kearney has predicted that a quarter of bank branches will close across Europe in the next three years as new customer habits around digital banking - forced by the pandemic - become permanent.

This is a sharp increase in the ongoing trend of bank branch closures across Europe, which saw 35 per cent branch closures in the last 10 years.

Now in its 11th year, the global consultancy partnership's European Retail Banking Radar tracks 92 retail banks in 22 European markets, comprised of 50 banks in Western Europe and 42 banks in Eastern Europe.

The study also predicted an increase in online banking as a result of these closures, with 70 per cent of all European account openings, deposits, consumer loans and credit card applications happening digitally within the next three years.

Prior to the COVID-19 outbreak, Kearney’s research showed that 53 per cent of European banking customers reported not using in-branch or other physical channels to research and buy new products.

Currently, the UK, Norway and Sweden appear to be the most digitally-advanced retail banking markets, where 70 per cent of customers already use remote channels like online banking, mobile apps and call centres to research and purchase products.

As customer adoption of online banking increases, Kearney also suggested that those remaining bank branches will be primarily staffed by advisors to focus on advise and sale of complex products like mortgages, life insurance, pensions and investments advice.

Some branches may even be repurposed into a hybrid space for both customer-facing and head office staff, as banks re-evaluate the cost implications of a centralised headquarters considering remote working practices adopted during the pandemic.

Simon Kent, partner and global head of financial services at Kearney, commented: “If there were ever a time to invest in providing a seamless customer journey across digital and offline channels, it’s now.

The pandemic was the catalyst needed for many changes already underway in the banking industry and has significantly accelerated demand for these changes to happen quickly - customers won’t go back to how things were, so neither should banks."

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