The Covid-19 outbreak is having irreversible impacts on the banking industry already. Above all, it forces banks to shut their branches. And digital challengers such as N26 are quick to jump on the opportunity to change customer behaviour for good.
“I expect that within the next ten years 70% of bank branches will disappear,” N26’s general manager of Germany, Austria and Switzerland, Georg Hauer, told to FinTech Futures.
He continues with contemplating this idea arguing that customers forced to used the digital way are not be willing to take the step back after the coronavirus outbreak will be over. “Obviously in some countries more than in others,” he caveats. “But in such a situation as national lockdowns, it accelerates the realization: ‘I don’t need my bank branch anymore’.”
The N26 challenger bank expects “certain fintechs will grow in this time of crisis”, largely down to countries such as Germany, where using cash is still widely preferred.
Also, the aspect of the World Health Organisation explicitly recommending the use of contactless payments will make customers perceive cash as “dirty” well maybe – forever and make them turn to safe online payments.
Germany’s largest lender Deutsche Bank was one of the majors that announced the temporary closure of more than 200 branches due to the pandemic this week.
“No matter what you prefer, you need to buy stuff online,” says Hauer. “And we, as a fully digital bank, can offer that safer payment process at the moment.”
N26 seems very confident that this shift, accelerated by the Covid-19 virus, will have “a long-lasting effect on the years to come”.
“It’s very likely that regular customers will not go back to their old mode later on, because if they realize they can do everything without a bank branch – why would they?”
The bank’s chief financial officer (CFO) Maximilian Tayenthal made a similar argument to Bloomberg on Monday.
He said: “We assume that many people will open an online account because more and more bank branches are closing due to the coronavirus crisis. Online banking will become much more important.”