Banks in Germany: How the branch network is shrinking

As of: 01/29/2021 8:44 a.m.

For Commerzbank and Deutsche Bank customers, the journey to the bank branch is getting longer and longer. Both institutes want to give up hundreds of their current locations.

The death of branches in the German banking landscape is assuming ever more dramatic proportions. After a third of all branches of banks and savings banks have been lost in the past ten years, Commerzbank has now announced new bad news.

It wants to close 340 of the 790 branches currently remaining nationwide, so that in the end only 450 branches remain. At the same time, 10,000 jobs, around a third of the workforce, are to be cut. The previous CEO Martin Zielke had already suggested similarly radical savings plans. The second largest domestic private bank follows the industry leader Deutsche Bank. He wants to close around a hundred branches by 2022.

Commerzbank: Group wants to cut 10,000 jobs according to media reports

January 28, 2021 5:39 pm

Deutsche Bank closes 200 branches

In addition, it is planned to close around 50 Postbank locations in each of the next two years. Overall, the branch network in Germany will shrink by another 200 branches by the end of 2022. Deutsche Bank currently has around 500 branches nationwide, while the Postbank subsidiary operates around 800 locations. With the branch closings

In addition, Deutsche Bank is reducing additional jobs in the private customer business. Around 350 jobs are to be cut in the headquarters in Bonn and Frankfurt by the end of 2022, a good third of the jobs there.

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The previous concept has had its day

“The previous concept of the bank branch has long since become obsolete and urgently needs to be put to the test,” explain the authors of a study by the consulting firm Oliver Wyman. Because of the increasing use of digital offers – keyword online banking – and demographic changes, the number of customers visiting a bank branch has decreased significantly in recent years. In fact, the digital offerings have recently continued to increase, so that there is no longer any reason for many customers to go to a bank branch.

Added to this is the growing pressure from so-called online banks such as ING, Comdirect, which belongs to Commerzbank, or Berliner Bank N26. In contrast, the branches of traditional banks and savings banks, which can usually be found in expensive locations, cost a lot of money. This at a time when the banks are under massive pressure due to the European Central Bank’s ongoing zero interest rate policy. As in the past, all of this makes running a broad, nationwide branch network increasingly unprofitable.

Branch deaths are likely to continue

The experts at Oliver Wyman therefore assume that the branch deaths will continue. The number of bank branches in Germany is likely to decrease to around 19,100 by 2025. By 2030, the number of locations should even shrink to 15,800.

Germany is thus following the trend in other European countries in which the branch density has been much lower for a long time. Especially in Northern European countries such as Sweden, Finland, Denmark, the Baltic States, but also in Great Britain and Ireland, there are already fewer than two branches per 10,000 inhabitants. In this country it was recently 3.6.

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The bank branch is not an obsolete model. If it is in the right form, it will continue to have an important raison d’être in the future, emphasize the experts at Oliver Wyman. However, it is also certain that the way to the next ATM will be longer for many customers, because withdrawing cash is still the main reason for most people to visit a bank branch.

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