In Southeast Asia, 11,000 bank branches are expected to close until 2030

As the entire banking industry shifts more and more to digital solutions and services and many, particularly tech-savvy customers have not seen the interior of a physical bank branch for quite some time, a hard rain’s a-gonna fall for brick and mortar branches of money houses.

And Southeast Asia is no exemption. According to a recent report by consultancy Roland Berger, almost a fifth, or 11,000, physical bank branches will close during this decade up to 2030, most of them in Indonesia, the Philippines, Thailand and Malaysia.

The majority of new banking customers will be digital-first people comprising Generation Alpha, Generation Z and Millennials, and it is estimated that the proportion of customers unlikely to use bank branches will reach 60to 70 per cent in the next decade.

“Indonesia, Thailand, the Philippines and Malaysia will see a significant branch consolidation as their economies continue to grow, government regulations and incentives facilitate more digital banking activities and banks speed-up their efforts to adjust their existing large branch networks after having been slow to do so in recent years,” the report said.

In Indonesia alone, more than 7,000 bank branches are expected to shut their doors, nearly 2,000 in Thailand, around 1,500 in the Philippines and close to 600 in Malaysia, the report said. Singapore will record the highest percentage closure rate at 31 per cent, while Vietnam, Laos, Cambodia and Myanmar will remain on an upward trend in physical presence until 2030 as online banking has not yet gained the critical mass in those countries. It is estimated that the latter nations will open around 2,000 new bank branches until 2030, bringing the net closures in the region to 9,000.

But the trend is unstoppable. As regional banks invest more in digitalisation, common services such as money transfers, payments, loan applications, financial advice and a host of other banking offerings can now be accessed online, eliminating the tedious and time-consuming visit to the local branch, even more so during the Covid-19 pandemic.

Comfortable with tech, and served by a whole host of new digital banking tools, the ranks of young consumers will likely drive many of the region’s physical branches into obscurity, bringing Southeast Asia up to speed with the global banking landscape, which – in turn – would lead to a boom in the establishment of new digital-only banks, according to the report.