Dive Brief:
- The coronavirus has accelerated KeyBank's digital transformation by five years, its CEO Chris Gorman said Monday at the Barclays Global Financial Services Conference.
- That has "implications for what goes on in the branches," Gorman said, adding the bank aims for a "more impactful" footprint. He said the digital shift gives the bank an "opportunity to continue to ramp up" branch closures, but didn't give a target number. Key closed 61 branches in 2019 and 20 so far this year, according to American Banker, for a 1,077-branch footprint.
- Gorman said the path toward growth for the bank likely wouldn't include large-scale M&A. "The best opportunity for us is to continue to implement our organic growth strategy," he said.
Dive Insight:
Gorman's comments solidified what KeyBank's executive vice president and head of digital banking, Jamie Warder, told Banking Dive in July.
The bank spent the past decade strategizing how it can digitize its products to provide a mix of remote and in-person capabilities, Warder said. But the pandemic forced Key to question the speed of its existing digital strategy.
"Do we need to speed up even more, because there's a very real shift in behavior that's happened over the last couple months," Warder said. "[The pandemic] had us thinking, 'Do we need to go faster, harder and stronger at our digital strategy?' But the good news is, we've been at this for a while, driven by non-pandemic-related things."
Despite customers' embrace of digital channels, Warder sees the pandemic as a "step change" in which digital use will peak and level off slightly before increasing with time. Branch restrictions forced some customers to engage digitally, even if it's not their preferred way to bank, he said.
Gorman on Monday said any savings the bank can find from shrinking its physical footprint — it spent $147 million on occupancy in the first half of 2020, according to a Securities and Exchange Commission (SEC) filing — would be invested in technological enhancements.
Warder said he sees servicing, advice and insights as the areas most ripe for digital enhancements — and as the bank de-emphasizes "transactional work," he said, that'll free the workforce to focus on advice and other higher-value-add pursuits.
Gorman said KeyBank's $4.1 billion acquisition of First Niagara Financial in 2016 has shown him he'd prefer to grow the bank from the inside.
"I think the jury is really out on M&A in general and mergers of equals in particular," Gorman said Monday. "From spearheading our integration of First Niagara, I know that there's a real opportunity cost ... to buying whole banks."
