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This Week in Retail Banking | June 27, 2020

A new surge of COVID-19 cases is tearing through several states, raising doubts about whether the economy will be able to make a V-shaped recovery. At the same time, new jobless claims have come in higher than expected and widescale layoffs were announced by Macy’s and HSBC. These developments underscore the need for banks to be flexible with their reopening plans and come to grips with the idea that the transition toward more normal activity may take even longer than originally expected.

Novantas continues to monitor these developments by using data from cell phone movement patterns and online shopper research. This week’s report is also supplemented with extracts from a branch study that includes 46 banks and examines trends and planned actions.


Many geographies this week announced plans to pause their reopening plans due to a resurgence of COVID-19 cases, including Texas which had been one of the most aggressive states to reopen. These developments call into question the reopening plans under way by banks. Just last week, nearly two-thirds of the 46 banks participating in a Novantas SalesScape COVID survey believed that more than 75% of their branch locations would return to pre-COVID operating hours and access in the next three months. Based on this week’s news, those results would likely look different today and indicate that banks may be too optimistic about their reopening plans.

COVID Cases & Positive Test Rates

Total U.S.

New COVID Cases
Positive Test Rate

Uptick Markets**

New COVID Cases
Positive Test Rate

Source: Novantas Analysis, NovaLocation, PlaceIQ

**Any market with more than a 33% increase in new cases or positive tests (22 states in total)

Most banks have kept branches open, but require customers to make appointments if they want to visit branch lobbies. Customers still have access to the same services, while the bank ensures that customers and colleagues are safe and protected. Banks have also discovered an additional benefit in that appointments reduce teller volumes and free up significant time for outbound effort, allowing banks to focus on relationship development and deepening.

In addition to the operational advantages in the near-term, this period allows banks to prepare for a longer transition to a new operating model. For most institutions, that new operating model calls for massive change, including a shift in focus from reactive transaction processing and sales fulfillment to proactive outreach and relationship development, fewer high-visibility locations and better integration with a specialty sales force.

Although these represent good reasons why banks should reopen at a measured pace, it cannot be ignored that the branch network continues to be the largest sales engine for banks. As a result, lobby restrictions have left banks with lower checking sales because walk-in traffic accounts for 80-90% of new-to-bank sales for most institutions. Still, checking-unit sales have fallen by close to 60% partly because consumers just aren’t focused on changing banks or opening new accounts at this time. It isn’t clear that those sales would come back even if the lobby resumes normal operations. Attrition rates have stayed lower across the industry, suggesting that switching rates (and thereby acquisition rates) are also lower right now.

In order to test the scenarios that are appropriate for a reopen, Novantas examined branch sales volumes across the SalesScape benchmark data and found that new-to-bank consumer checking sales per branch averaged 7.8 in April, down from 18.8 a month in 2019. While the decline in sales is significant (almost 60%), the absolute number of lost sales is a less significant 11 per month. Banks could likely still achieve most of these with creative lobby-management approaches.

New to Bank Consumer Checking Sales in 2019

Source: Novantas SalesScape

As we enter the fourth month of COVID-related changes to the branch network, consumers have started getting accustomed to the new operating model and there is little doubt that this period will have lasting impacts on customer behavior. Banks should ensure that they are using this opportunity to transform the network. That means being strategic about reopening and not applying a one-size-fits-all approach.

For almost all of the banks in the SalesScape benchmarking data set, we find that only 25% of the branches represent 57% of the sales for the bank. Therefore, if banks intend to reopen the network in order to maintain sales performance, they likely don’t need to reopen all branches.

The main issue with opening branches too quickly is that it limits the ability to close it permanently at a later time and also stops consumers from adopting new behavior. Many banks that have already re-opened have seen the lobbies very quickly fill up as people resume their old behavior.


Somewhat / Very Likely
Neither Likely Nor Unlikely
Somewhat / Very Unlikely

Source: Novantas Customer Knowledge | COVID Pulse Survey
Sample: FABB shoppers – week 1-3-3/30 to 4/19 (N=736), Week 4 -6: 4/20 to 5/10 (N=874), Week 7-9: 5/11 to 5/31  (N=386), Week 10 – 6/1 to 6/7 (N=107), Week 11 – 6/8 to 6/15 (N=128), Week 12 – 6/16 to 6/21 (N=97)


Increasingly, Novantas believes that banks should build their strategies around foundational branches that have strong stand-alone economics – both high deposits and high sales. These locations will be the ones that banks should feel comfortable opening earlier in the process and will allow the bank to ensure that opportunity is not left on the table (without giving up future optionality).

Beyond these select branches, it will make sense to open some additional locations over time, but there are a few key notes to keep in mind.

First, transit patterns have changed drastically and historic behavior may not be representative of COVID or post-COVID behavior. Work centers are a good example of this. Transaction volumes and sales have historically been high in work centers, but some of these locations have been hit the hardest as employees work remotely.

Second, there is no need to rocket from closed lobbies to full hours of operation. Respondents to the COVID  branch survey said on average that they estimate 44% of branches will maintain current COVID hours or increased hours, but remain below normal pre-COVID-19 levels. Since only about 18% of branches had more than one new-to-bank checking account per day pre-COVID, keeping the lobby closed for an extra one or two hours a day during the transition to full operations likely won’t be very disruptive to sales and would allow branch bankers to make quality outbound calls.

Finally, banks should coordinate hours and services available across community clusters, ensuring there is easy access to walk-in lobby service for the community at some locations, while maintaining appointment-based access at other locations.

Banks should use this time to get a clear vision of the future-state network requirements as they prepare a reopening strategy. This past week has demonstrated that the situation is extremely fluid, underscoring the need for banks to carefully track trends and not adopt a one-size-fits-all approach to the network. While immense uncertainty remains, it is very clear that pre-COVID transaction volumes won’t be enough to guide strategies that will be required in the coming weeks and months.


Checking and savings balances both continue to grow above historical levels, though growth rates for each product have normalized closer to prior falling and low-rate environments. Customers who received stimulus payments are showing continued balance growth, especially those in higher-balance tiers.

The next few weeks will be significant for balances, although many uncertainties remain. Spending may resume in geographies that continue to reopen and consumers are facing July 15 tax deadlines that will likely lead to account outflows. The resurgence of COVID-19 cases in other parts of the country, however, are already prompting some businesses to close and governments to hit the “pause” button on their reopen plans.

Meanwhile, the pace of CD runoff has remained consistent since the end of April, with runoff in the range of 40-50% on an annualized basis. In many cases, the CD funds are shifting to liquid deposits within the same bank.

A full weekly deposit tracker is available to CDA clients. Contact Adam Stockton at for details.


Some 4.3 million homeowners missed their mortgage payments in May, up from two million at the end of March and representing the highest level since 2011, according to Black Knight, a mortgage data company.

nCino, a provider of cloud-based banking software, filed plans with the SEC to raise $100 million in an initial public offering. The company was founded in 2011 by executives at Live Oak Bank in Wilmington, N.C.

Demand for mortgages stands at 18% higher than a year ago and refinance applications are 76% above year-ago levels, according to the Mortgage Bankers Association.

Mastercard agreed to buy Finicity, an aggregator of real-time financial data, for $825 million.

A survey conducted by the National Federation of Independent Business found that 14% of PPP loan borrowers expect to lay off employees after using the loan.

On a related note, 53% of small businesses surveyed by Small Business for America’s Future said they have taken on new debt related to COVID-19, with nearly one in four saying they have new debt of more than $20,000 and 18% saying they have taken on new debt of more than $100,000. Some 40% of respondents said they are using PPP loans to reopen while 29% are dipping into personal savings and 20% are using credit cards. Only 12% said they are relying on bank loans.

Apple announced that it is closing some of the stores that it had recently reopened in Florida, North Caroline, Texas, South Carolina and Arizona due to a rising number of COVID-19 cases. Disney delayed plans to reopen its theme parks in southern California until it receives approval from state officials. The parks had been slated to reopen on July 17, but Disney said will not issue guidelines until after July 4.

Ally Financial terminated its $2.65 billion acquisition of CardWorks, a subprime credit-card lender, citing “unprecedented” economic and market conditions related to the pandemic. Neither company will incur termination or breakup fees for the deal, which was announced in February.

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+1 (212) 953-4444

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