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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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C Green
August 06, 2012 at 11:07 pm

I have worked in banking for 25 yrs. I took five years off to care for a parent and in five years I didn't need to visit a branch not even once. Direct deposit, online banking etc. there wasn't a need to go inside. Working in a branch most people I see at my desk are peope who refuse to use technology, who cannot manage their own finances or sadly just lonely. Some people get into their safe deposit boxes up to ten times a month. What in the world is in the box that requires that you have to see it that much?

August 06, 2012 at 10:57 pm

The real reason banks are closing is due to the public's realization of their incompetence and outright fraud. Honestly, bank failure is only a failure to it's customer's and the taxpayers. The bank executives pilfer all the money, after they've awarded themselves bonuses. Then they convince politicians on their payroll to give them more tax payers money to bail them out. Then the first thing they do is reward themselves with big million dollar bonuses as if their failure should be rewarded. The public is much smarter these days, that's why credit unions are so much in favor and membership is at an all time high. Plus they're the only ones making loans. The banks are just sitting on all the money we tax payers gave them and they're just biding their time figuring out another way to steal it.

August 06, 2012 at 10:56 pm

Not everybody can afford on-line banking, not to mention a computer...another way to nickle and dime their customers, now loyalty has a price...bring back the tellers.

August 06, 2012 at 10:49 pm

Most people still feel the need for face to face contact.
We are being encouraged constantly by some of the retail outlets to go paperless hinting that the post office may not deliver our payments on time.
I too like on line banking but still prefer to see friends who work at my bank, it's that personal touch.

August 06, 2012 at 10:24 pm

I have been homebanking for over 25 years without any problems. Very Convenient. When BofA first came out with HB I didnt have a computer, all was needed was a keyboard and a TV

August 06, 2012 at 10:17 pm

I am a banker. I have a lot of customers who love coming into the branch just for the friendly interaction and customers who love online banking that still have a need to come in to the branch for an explanation or fee reversal or advice. Some things are just better in person. :)

August 06, 2012 at 10:16 pm

I agree with Roger. I like to do my banking face to face. It just feels more secure.

Laura Paris
August 06, 2012 at 10:05 pm

I prefer to talk to the person at the bank and get my business done. I had to deal with larger banks such as Bank of America and trying to get through to them on the phone is like trying to open up the pearly gates to heaven from Hell. Online banking is not safe no matter what the banks says. Any hacker can get thru the banking system and especially if you have a cell phone. If a large bank was smart, they should have a office where you could go in and get your problems fix no matter what it is. Instead they would rather have you go and talk to a person on the phone who can't do a dam thing about your problem but act like they can. Customer service should be done in person not by some internet line.

Roger N. Allen
August 06, 2012 at 8:52 pm

I don't trust on-line banking due to security issues. I prefer to make a face to face deposit with my credit union branch. Then I don't worry about passwords and security codes being compromisied.

August 06, 2012 at 8:22 pm

Why would anyone want to go out of his way for basic banking services?? I like the convienance of online banking and consider it a hassle when I have to make a deposit.. How is that fun or ideal?? It's just like going to the DMV..