TD Bank will shutter 82 branches as it seeks to reduce physical locations and cut costs as the transition to digital banking forges ahead.
Yesterday, TD announced financial results for the first quarter ended January 31, 2021. TD reported earnings of CDN $3.3 billion, up 10% compared with the same quarter last year with adjusted earnings of $3.4 billion, up 10%. Canadian Retail operations reported net income of $2,037 million, an increase of 14% compared with the first quarter last year. In the US, retail net income was $1,000 million (US$776 million), a decrease of 13% compared with the same quarter last year. The U.S. Retail Bank, which excludes the Bank’s investment in Schwab, reported a net income of $791 million (US$615 million), a decrease of 16% from the same quarter last year.
According to a report in the Globe and Mail, TD is “culling locations that it considers redundant and reinvesting some of the proceeds in digital banking alternatives.” TD claims title as the number one banking app in Canada.
As of the end of January TD had 1087 locations in Canada and 1228 in the US.
Greg Braca, President and CEO of TD U.S., stated:
“You’ll see markets in future years where we continue to invest in new stores. But what you’re also seeing is the need for investing in digital capabilities, and we’re doing just that.”
News of bank branch closures is nothing new. Many incumbent banks have been slowly pairing the number of brick and mortar locations. Yet these same locations tend to cater to older, more affluent customers that have not yet transitioned to banking on a smartphone. But the future is clear as digital banking gains traction with superior services and lower costs all available 24/7. Meanwhile, a growing number of digital-only banks are looking to Hoover up customers by providing the same services for less while adding key features such as crypto trading or AI-infused banking. Perhaps the biggest question is whether, or not, TD and other incumbents can close physical locations fast enough to be able to compete with agile Fintechs.
On a personal note, I have been a TD customer for many years but I have never, ever visited a physical branch. Why bother?