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PNC Financial, KeyCorp Accelerate Branch Closures Amid Crisis

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At the virtual Global Financial Services Conference hosted by Barclays Capital yesterday, PNC Financial (PNC - Free Report) and KeyCorp (KEY - Free Report) announced plans of closing more branches through 2021 as part of their efforts to cope with the continued uncertainties and aftershocks from the coronavirus pandemic.

PNC Financial, which already planned of closing 80-90 branches this year, has announced plans of shuttering more branches throughout 2021.

William Demchak, the chairman and CEO of PNC Financial, said that the company will likely close 160 branches by the end of this year and around 120 branches in 2021, thus, shutting almost 280 branches by the end of the next year.

Demchak stated, “You will see us continue to thin out our network. For that to work, your digital sales have to pick up at a pace that offsets the sales you would get at the branches you are closing. So far, that is happening and then some.”

As the current situation calls for social distancing, customers are now adopting online banking methods in place of traditional banking. Thus, banks are trying to enhance technology and roll out more digital products and services to consumers.

Notably, as an alternative to the traditional branches, PNC Financial has been opening up quasi-digital “solution centers”. It has opened at least 13 solution centers already, which provide customers the opportunity to consult with the bank's staff and access mobile workstations, ATMs and banking kiosks. In fact, by the end of this year, the bank plans on opening 12 more solution centers and an additional 25 in 2021.

Demchak added, “What COVID has done for us is it has shown us where to prioritize investments.”

While PNC Financial plans on using the funds saved by closing traditional branches to open more solution centers, KeyCorp plans on utilizing the savings, if any, from branch closures in boosting technology to create a better customer experience.

In fact, KeyCorp’s chairman and CEO, Chris Gorman, said that due to the impact of the pandemic, the company’s digital transformation has been accelerated by as many as five years.

While the company did not disclose the number of branches that it would close, Gorman said that their objective now is a smaller “more impactful” footprint.

Notably, in 2019, KeyCorp closed 61 branches and so far this year it has shut 21 branch locations.

Gorman also said that this shift from traditional bank locations to digital banking, owing to the pandemic has given the company an “opportunity to continue to ramp up.”

Apart from PNC Financial and KeyCorp, various other banks in the United States have been undertaking several initiatives to reduce expenses in an effort to cope with the pandemic.

Companies like Wells Fargo (WFC - Free Report) and Citigroup (C - Free Report) have disclosed plans of resuming layoffs as a move to reduce expenses.

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