Japan’s Mitsubishi UFJ Financial Group (MUFG) has decided to permanently close up to 40% of its local branches in the country by 2023, as customers shift to digital banking modes.

The move, which is expected to affect 300 branches, in line with the company’s strategy to adopt more cost-cutting measures in response to the Covid-19 pandemic.

Initially, the Japanese bank holding company planned to shutter 35% of its branches.

However, the pandemic forced the company to increase the number of branches that needed to be closed to achieve the cost-cutting targets.

Additionally, MUFG also plans to boost its presence in the online banking space as a result of this move.

The bank reported that nearly 45% of its 93 million transactions were made through its smartphone app last year.

The bank plans to slash the number of branches that offer full banking services to about 170, which accounts for one-third of bank’s branches as of 2018.

Moreover, the lender also plans to trim its workforce by 6000 people through attrition by fiscal 2023 since it has been struggling to maintain profits amid low-interest rates.

Banks being the essential entities during the current crisis, most of their branches, call centres and trading floors have remained open while sending employees home for remote working.

Major Banks like MUFG, Sumitomo Mitsui Financial Group (SMFG) and Mizuho Financial Group (MFG) have estimated a collective JPY1.1trn ($10.2bn) in credit costs for the current financial year.