First the good news: Branch sales seem to have recovered from the pandemic. In the second quarter, they exactly matched second quarter sales from 2019, and third quarter sales were down just 4% from 2019. That’s compared with the 26% year-over-year quarterly decline at the beginning of the pandemic. (See Figure 1.) And sales per non-teller FTE (sales and management) are back to pre-pandemic levels at 35 per day, even with no reduction to staffing – a somewhat surprising bright spot.
Now the outright bad news: Even though teller transactions have recovered from their early-pandemic low of 48% of pre-pandemic levels, they are still 36% below where they were before the pandemic. And productivity, measured as teller transactions per teller FTE per month, has declined by 22%. Even worse, that 22% would have been closer to the 48% decline in teller transaction without accounting for some adjustments to staffing. (See Figure 2.)
In almost any other industry, that falloff in productivity would be considered unsustainable. It indicates excess capacity is still in the system, and the need to address it is becoming more and more urgent.
At issue, however, is that the evident imperative to reduce headcount is bumping up against structural limitations. Hours need to be covered and various control processes require minimum staffing. As a response, banks will need to rethink some elements of their operating model, including branch roles and staffing mix, hours and days of operation and even service-level standards.
Notes: Lending includes Loans, LOCs, and HELOCs. Credit Cards are excluded from the dataset
