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Bank branches post rare decline

By Claes Bell ·
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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August 06, 2012 at 8:09 pm

The ATMs and smartphones have made things too easy in my opinion; you're supposed to think about your savings when you make a purchase and 'quick and easy' money bypasses that.

August 06, 2012 at 8:04 pm

It doesn't matter, corporate greed will still demand increased charges to users for existing services and new fees for new services they dream up in their quest for getting deeper into our pockets!

It also helps when their friends in Congress deregulated the banking industry and that same Congress currently has their collective heads in the sand when it comes to the "new" banking industry. Campaign contributions also deter any desire for the D.C. ostrichs to come up for air.

Never mind that things like B of A's purchase of Countrywide Loans, certainly the poster child for widespread banking industry poor leadership, bad judgement, and incompetence, are the real reason for their incestuous quest for more money from their customers.

August 06, 2012 at 7:39 pm

I've also noticed that along with the payphone, video stores, and typewriters, the internet has caused proofreaders to disappear as well.

August 06, 2012 at 7:20 pm

The proliferation of bank branches was a "branding" concept by the major national banks. Most branches have no one with the "authority" to approve a loan or even solve a simple problem, everything has to go through the main bank, usually located in another state.

I hesitate to think what would have happened the 3 times my debit card was compromised by major national retail chains & their card processors. Everything was back to normal in less than 48 hours. Give me a local bank anytime. Lower fees, convenient to me, employees with authority and they know who I am, not just a faceless account number.

August 06, 2012 at 6:41 pm

The banking industry is a mess.
As a kid in the 60's and 70's, pre-ATMs, banks made the bulk of their monies on the margin difference between interest earned and interest paid. Branch offices with tellers and human contact on a daily basis.
The 1980's came along and the bank officers made careless real estate loans to their contractor buddies. A builder gets a loan for 50 houses, builds 25, and pockets the rest. The housing bubble burst and banks failed. Huge consolidation in the banking industy. Many local banks become a few nationwide banks.
FFW 20 years and the whole thing repeats because no one wants to
1- restrain the growth of real estate prices per annum
2- require the 10% down pmt on purchase of housing.
The result is people getting 100% to 110% mortgages in CA, AZ, NV, FL. Flip-flip-flip-POP, the bubble burst again. Problem this time is that a huge bank that fails (like Countrywide) because of bad loans in the sunbelt now has NO money to lend in middle America.
Federal Govt steps in and pays $5 for every $1 of foreclosed property to help out their buddies who are CEOs, CFOs, etc.

August 06, 2012 at 6:19 pm

It's because their ads don't work, nobody knows how to sell anything anymore. Even Britney Spears couldn't sell Coca-Cola!

August 06, 2012 at 5:48 pm

As what you would call an older American, I miss full service Branches. There was a time I knew everybody and could get a small personal loan, car loans, boat loans, and mortgages at one place. Time was I could get a car loan faster than the dealer while in the dealers office and write them a check for car. Yeah, I know the good old days! Now don't get me wrong I use online banking & ATM more than most people. It keeps costs down. Itwas actually easier back then. one branch one person interface.

August 06, 2012 at 5:23 pm

I believe it's true that there are fewer 'brick and mortar' branches. Many branches have opened satellite offices in grocery stores. Obviously, it's a capital expense price buster. I do most of my banking online or at the ATM and only rarely go into the branch.
Having said that, because I pay most of my bills online, and deposit checks at the ATM, I really wish they'd start putting more deposit slips in the checkbooks! I run out of deposit slips WAY before I run out of checks!!!

August 06, 2012 at 4:49 pm

Bank branches will be around until big brother manages to do away with cash and everyone has a card or implant. That won't happen in my lifetime, so although branches may become smaller and fewer, they will be here for quite some time.

August 06, 2012 at 4:19 pm

I believe that bank branches will go the way of hand written cheques. This will cause problems for folks like myself as I do not have a smart phone (nor want one).