Private Banks in Brazil Close 1,000 Branches in Pandemic

RIO DE JANEIRO, BRAZIL – With the increase in digital practices because of the pandemic, a trend has gained momentum among the country’s three largest private banks: the closure of bank branches.

In 2020 alone, around 1,000 in-person service points of Itaú Unibanco, Bradesco and Santander have shut their doors, resulting in the dismissal of 11,000 employees. This is a sharp increase over last year, when these same banks closed 430 branches and closed 7,000 jobs. The goal is to cut costs and readjust the service to customer demands.

In turn, many surviving branches are undergoing restructuring. Santander, for instance, now offers coworking areas and coffee to customers, while Bradesco is now reassessing its branches differently, classifying them as business units.

In the second largest private bank in the country, this is a trend that should gain ground. According to Bradesco’s executive director of investor relations, Leandro Miranda, 500 of the 700 conversions planned for 2020 have already been carried out. The main difference in this model is the absence of bank clerks, which reduces costs by 30 to 40 percent compared to a conventional branch, particularly in terms of security.

Santander recently announced that it will create a social environment in the parking lots of its branches, in partnership with its automotive website Webmotors. In addition to meeting points for car sales, the parking lots will be able to host leisure and catering options, such as food trucks. The design also allows for small gyms.

Itaú has also been closing branches, but, in a note, it said it still sees importance in the in-person relationship. “The recent technological transformation and the growing demand for digital channels is clear, but our physical branch network continues to play a very important role (…) as a more humanized space for relationship and consulting,” said the largest financial institution in Brazil.

For Joelson Sampaio, coordinator of the economics course at the Getulio Vargas Foundation (FGV), banks had already been working on optimizing physical branches even before the recent digitalization wave. He recalls that years ago the sector’s consolidation led some banks to hold an excessive number of points. However, he notes that many older people still value the existence of physical branches.

A 2019 survey by QualiBest Institute – before the pandemic – showed that 81 percent considered the existence of physical branches important, albeit the frequency of visits was low.

Public banks

Among state institutions, Banco do Brasil has been closely monitoring the trend of Itaú, Santander and Bradesco. In the 12 months ended in September, the BB closed 227 branches, while opening 56 points that it classifies as specialized units.

On the other hand, Caixa Econômico (the federal savings bank) does not corroborate the above trend. Although Caixa Tem, a mobile app used for emergency aid distribution, is a step towards digitalization, the bank has not followed the branch closure trend. At the end of the first semester, Caixa operated 53,700 branches, a virtually stable number in relation to the same period in 2019.

“Because of its role in transferring government benefits to the population, Caixa’s operations demand the maintenance of its branches, particularly for people in regions where access to technology is poor,” says Rafael Schiozer, professor of finance at FGV-Eaesp.

However, he believes that as access to digital channels among the population increases, Caixa should also expedite the review of its physical spaces. “In the medium and long term this should be the case, given the bank’s ability to distribute emergency aid through the app.”

Source: Estadão Conteúdo

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