Banks close branches
After decades of growth, the financial crisis touched off a wave of bank failures and branch cutbacks that are still in effect, says Sam Kilmer, a senior director at Cornerstone Advisors Inc., a financial industry consulting firm in Scottsdale, Ariz.
"With the crisis, there was a lot of consolidation," Kilmer says.
The banks that have survived that wave now have to contend with new regulations designed to protect consumers but that are also expensive and complex for banks, Kilmer says. While some bank fees have increased, limits have been placed on overdraft and swipe fees.
Another factor is margins, says Bert Ely, a banking consultant in Alexandria, Va. Banks make money on the spread between the rate they pay to depositors and investors, and the rates borrowers pay on loans, known as the net interest margin. The Fed's push to revive the economy with low interest rates has cut into that margin substantially, Ely says.
"That's what put banks in a real squeeze, plus regulatory down pressure on fees," Ely says. "I think it's a driver in branch closings and banking consolidation."
Banks' troubles have had consequences for consumers as well as banks trying to wring more profits out of customers. In 2009, 76 percent of checking accounts were free, according to Bankrate's Checking Survey. By 2012, that number had fallen to 39 percent.