The Branch Is Back. But It’s Not the Same Branch
By Jacob Reeves, General Manager at FMSI
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Back in March 2020, I watched institution after institution close their lobbies in a matter of days, with drive-throughs becoming the lifeline almost overnight and the trade press running a wave of pieces asking the same question: Is the branch finally dead?
Credit unions alone lost 449 branches in the first year of the pandemic. It took five full years to get them back, and yet the branch isn’t dead. What COVID actually did was compress a decade of change into about 18 months, force a lot of decisions that should have been made years earlier, and expose which institutions actually had a plan for what their branches were supposed to be doing.
What Got Accelerated
None of what happened in those first few months was completely new. Digital account opening went from a pilot nobody had fully launched to a basic requirement almost overnight. ITMs and video tellers that had been stuck in internal debates suddenly had a very clear reason to move forward. Appointment-based scheduling was something most credit unions and community banks had resisted for years (members expected to walk in, and institutions accommodated that), but when it became the only option, members adjusted faster than most people expected.
Video banking deserves its own moment here, because it actually split into two distinct capabilities that often get lumped together. There’s the video teller, which is essentially a remote version of a traditional teller interaction useful for extended hours and reduced staffing pressure. And then there’s the broader virtual appointment model: a mortgage consultation over video, a financial planning session with a specialist working from home, a loan closing that doesn’t require anyone to drive anywhere. Those are different use cases, and the distinction matters: The first replaces a teller window, while the second replicates a full branch experience across any device. The institutions that figured that out early are running hybrid models today that their competitors are still trying to replicate.
Contactless payments were another shift worth noting. Members who had never once tapped a card learned in a matter of weeks, and that behavioral change stuck.
What Created Real Friction
Here’s where I’d push back a bit on some of the more celebratory takes on what the pandemic did for digital banking.
The walk-in experience took damage that took years to repair. Capacity limits and appointment requirements created genuine barriers, particularly for older members and those less comfortable with digital channels. Community banks and credit unions have always competed on warmth, and plexiglass, masks, and physical distancing eroded that in ways that are hard to quantify but very real.
The branch closure wave is the part of this I don’t think gets talked about enough. The years 2020 and 2021 saw the largest branch contraction in the modern era, and while some of those closures were financially necessary, others used COVID as an opportunity to close branches they’d been eyeing and did so faster than the data warranted.
Staffing was the other major wound. The Great Resignation hit branches harder than almost any other part of financial services operations, and rebuilding institutional knowledge after it walks out the door takes years, not months.
What Came Back
What surprised me, honestly, was how many of those supposedly permanent changes turned out to be temporary. Lobby traffic returned. The predictions of near-zero branch visits, which were serious and mainstream in 2020 and 2021, just didn’t pan out. Members came back, not for everything, but for the things that matter most: complex decisions, significant financial conversations, situations where they want to look someone in the eye.
Reality check: The numbers bear that out. According to NCUA data analyzed by Credit Union Times, credit unions as of December 31, 2024 had 22,016 branches — one more than they had before the pandemic began. Every location lost in 2020 has effectively recovered. That’s not what a dead channel looks like.
The member preference numbers tell the same story. A majority of U.S. banking customers still prefer in-person interaction when seeking financial advice, and mortgages, small business loans, and estate planning still drive people through the door. Some institutions eliminated teller lines entirely during the pandemic; a meaningful number quietly brought them back after member complaints.
Banks have been closing branches for years. Credit unions have been building them back. That difference isn’t an accident.
Physical presence still heavily influences where people choose to open accounts, even when they rarely visit. There’s something about knowing the branch is there that matters to members in a way that doesn’t always show up cleanly in traffic data.
What Winning Looks Like Now
The institutions that came through this well generally had one thing figured out that others didn’t: they knew what their branches were actually for.
Part of that is accepting something that’s basically true: digital handles everyday transactions better than a branch can. But branches were never just about transactions for community financial institutions (CFIs), they were about relationships. The CFIs that reframed their branches as relationship centers, with different staffing models, different performance metrics, and different expectations for what a branch visit should accomplish, are in a much stronger position today.
They also figured out that video and in-person aren’t competing channels but work together as a continuum. Open an account via video, discuss a loan in-branch, close remotely. The channel follows the member’s need. The strongest institutions built that flexibility into their operations rather than picking a side.
What’s next: The focus in 2026 has shifted noticeably. The conversation we have most often with the institutions we work with has moved away from building new systems and toward getting more out of what they already have. That means getting existing technology to do more, figuring out where AI actually helps without pulling the team off course, and running branches with staffing levels that reflect today’s traffic patterns rather than pre-pandemic assumptions. People are still needed, but hiring has slowed, and leaders are being asked to deliver results with leaner teams. According to CSI’s 2026 Banking Priorities survey, financial institutions are broadly focused on automation that helps them do more with less, and that’s exactly what we’re seeing at the branch level.
Bottom line: The branch isn’t dead … it never was. But the branch coming out of this period looks different from the one that went in, with fewer teller windows, more universal bankers and financial advisors, and a much clearer sense of purpose. That clarity, I’d argue, is the most useful thing the pandemic forced on the industry, even if it came at a cost no one would have chosen to pay.
