new branches of small format banks pay for themselves faster

A number of large Russian banks have been actively increasing the number of offices this year, despite the trend of transferring services to online channels. Next year, banks promise to continue expanding their branch networks. At the same time, banks often abandon traditional office formats in favor of smaller areas, for the self-sufficiency of which it may be enough to issue just one loan per day.

Several banks plan to increase the number of offices in the near future, according to a Kommersant survey. In particular, VTB plans to increase their number by 1.4 times over three years, to 1.8 thousand branches. Alfa Bank intends to enter a hundred new cities. Pochta Bank plans to expand by 500 new service points, Sovcombank’s network can grow by 10–15% (about 170–250 offices), and Gazprombank plans to increase its network by 20%, or 80 new offices.

In general, during 2019–2021, the network of banking offices decreased by 2 thousand branches. At the same time, the stabilization of the market in 2022 should be attributed to Promsvyazbank (PSB), which actively opened branches in new territories (DPR, LPR, Kherson and Zaporozhye regions). Moreover, over the ten months of 2023, according to the Central Bank, the number of bank offices decreased by more than 300. However, this was primarily due to the active reduction of Sberbank’s network (by almost 500 branches). In addition, the networks of OTP Bank and MKB were reduced by dozens of branches, and Rosbank, Raiffeisenbank, and Unicredit Bank were reduced by a few branches. However, Alfa Bank, PSB and Sovcombank actively increased their presence in various regions, which in total opened up to 900 new offices (according to Kommersant’s estimates based on data from the Central Bank website).

The expansion of the VTB network is planned by entering new regions (Ingushetia, Kalmykia, Tuva, Karachay-Cherkessia), Deputy Chairman of the Board of the Bank Georgy Gorshkov explained to Kommersant. At the same time, it is planned to retain more than half of the Otkritie FC network (240 branches), and another 250 offices will be opened as part of the development of its own network. Sovcombank (a network of 1.7 thousand branches, including mini-format ones) is now growing its presence in large cities. For Alfa Bank, one of the focus areas has become towns and cities with a population of less than 100 thousand people.

All banks note that they will develop the format of compact offices. According to Mr. Gorshkov, despite the fact that “their functionality does not differ from usual,” the area will be smaller—about 50 square meters. m. “New branches are opening mainly in the format of mini-offices “at home” without cash services with a small number of employees,” notes Managing Director of Sovcombank Anna Kambulova. “New branch formats have been developed for new cities—smaller, more economical,” noted Elena Tyatenkova, head of Alfa Bank’s network management department.

Many other banks are also planning to reformat their branches. Sberbank plans to change the format of branches, in which the client manager should turn “from a seller into a trusted advisor,” it was reported at Investor Day on December 6. By the end of this year, GPB intends to open the first office of a new type, in which 70% of the space will be used specifically for services. This year, GPB has already transferred 31 departments to microformat.

A number of banks with a shrinking branch network are talking about the penetration of mobile applications and a decline in office attendance. For example, Unicredit Bank notes that “many services are now available online and there is no need for the client’s physical presence.” Raiffeisenbank is abandoning offices that are “least popular among clients.” MKB notes that office attendance did not recover after the pandemic, falling by about 30%, so the bank “began transforming the network.”

In general, experts are skeptical about the idea of ​​expanding the bank’s branch network. “The benefits of this step are not obvious. After all, the penetration of mobile banking is already high and continues to grow,” notes banking expert Olga Ulyanova. “Many clients no longer remember the last time they were in a bank office, and do not expect such visits in the foreseeable future.” The only explanation, in her opinion, is precisely the “reformatting of the office network.” For example, “opening lighter, cheaper or mobile offices in more accessible locations, followed by closing less effective points of sale.” According to Sovcombank, the cost of opening one mini-office averages about 2 million rubles, operating costs – about 312 thousand rubles. per month, and for its self-sufficiency, on average, issuing one loan per day is enough.

Olga Sherunkova, Ksenia Dementieva