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Bank branches post rare decline

By Claes Bell · Bankrate.com
Thursday, August 2, 2012
Posted: 5 pm ET

If you've noticed a lot of shuttered bank branches lately, you're not imagining things.

Nationwide, banks closed 2,001 branches last year and added 1,234, for a net loss of 767 branches, according to the latest data from SNL Financial. That number represents less than 1 percent of bank branches in the U.S., so if you prefer to bank in person, it's not the end of the world.

But I'm not convinced it's totally meaningless, either. An annual net decline in bank branches is a pretty rare thing. In fact, looking at the Federal Deposit Insurance Corp.'s data on the number of FDIC-insured bank branches nationwide, I only count three years it's happened since 1934, 2010 being the last. Should the FDIC data mirror SNL Financial's data, that would put 2 of the 4 net declines in the last three years.

So what changed?

These aren't exactly boom times for banks. Hundreds of banks have failed since the financial crisis began in late 2008, and I'm sure the banks that acquired the remains of those failed banks closed down a lot branches they didn't need.

But I'd also bet the rise of mobile and online banking is also contributing. Yes, it's probably a little early to declare a trend and start working on my "How online banking killed the bank branch" story. It's entirely possible that people actually prefer branch banking and banks that hold on to their branches will outcompete those that get rid of them. But I do think it's significant that branch growth appears to be falling off just as those technologies are taking off. It adds another data point to the news we got that Bank of America has been quietly "realigning" their network of ATMs by making it 9 percent smaller.

You have to think that banks are reevaluating the necessity of having physical branches in an age when customers can do most of the essential tasks of managing their checking accounts in a few minutes on a smartphone, wherever they happen to be.

What do you think? Are we witnessing the decline of the bank branch? Will traditional banks ever go "branchless"?

Follow me on Twitter: @ClaesBell

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35 Comments
Howard
August 07, 2012 at 4:40 pm

Have you seen that commercial where you go into the store and turn on a blender to get help? Well I think if all bank branches disappear and there is nowhere to go for person-to-person contact and someone to take ownership of your concerns regarding your banking issues we have all been placed into the preverbal blender. I understand the business model that shows some branches need closing because the lack of traffic in that branch but please do not give me a 800 number and an endless voice mail menu to get lost in.

Angelika Butz
August 07, 2012 at 4:12 pm

I personally do all my banking on-line. I like the convenience of knowing exactly how much funds I have at any given moment or to see my purchases in my account in an instant. I have been with my bank for 20 years and I love my bank. If I do have to get in touch with my bank I get great service on-line (it is not out-sourced)as well as in branch which I rarely use. I do see the trend for more online banking but do not see the complete demise of branches.

Julie
August 07, 2012 at 2:41 pm

The times when you got your window cleaned at the gas station while a smiling gentleman filled your tank are over. The corner grocery store owner who met you with a smile and asked about your family is gone.
The new generation is more comfortable with mobile and on-line interactions. My son can have friends over and they text vs talk to one another while in the same house! As with all things,there is always a cost to change. In this case it is a loss of the human interaction and the jobs they created in exchange for a faster, cheaper and to some, quicker way of getting something done.

cathy
August 07, 2012 at 1:33 pm

Lets see-get ready to go to the bank, go to the bank, stand in line at the bank, make sure the transaction is correct before leaving the bank! How much time does that take? How much gas does that take? The impact is endless! We were all negatively affected by the real estate bubble. The more I can do with mobile transactions the more I save!

Dave
August 07, 2012 at 12:28 pm

Just like every other business banks will try "teller-less" transactions if it works, bye bye tellers.