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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 07, 2012 at 11:45 am

There will always be a need for the "personal touch". Most people need to interface with a human being when it comes to their finances at some point. The structure and services rendered may change, but the physical bank will survive, but not as we know it today.

Dorothy R
August 07, 2012 at 11:45 am

The message being spoken here is very true. Greed is at the top of the banking industries and overdraft fees are out of control. In many states now do not accept out of town checks. The federal and state credit unions are still on the thrive because of the federal government employees. The civilian employees are going to prepaid cards and can have their paychecks direct deposit to these cards and many of the cards has no fees. One entity is Walmart Cards and Russel Simmons and Green Dot Cards and many more if we take time to search. The main reason is Greedy, Greedy, Greedy People sitting in those Administrative Offices looking for bonuses and retirement for a luxury lifestyles and that is what is hurting us and the physical banks.
They will not live to enjoy the sweat & tears the taxpayers work to keep their jobs going, because China is hold the largest note there is on the United States. This to will pass and everyone will feel the effects.

August 07, 2012 at 11:10 am

The aanswer is really much simplier than stated. When you mentioned the financial crises and technology they are just the symptoms of branch closings. The actual CAUSE of the closing is flat our GREED! When those at the top want to cut spending so that they get their annual million dollar bonuses and salary, they simply cut jobs. What "caused" the financial crises from the beginning? Greed! When the taxpayers bailed them out they actually use those funds to pay bonuses. Greed! In my 30 + years in banking I have lost 4 jobs due to so called "cost cutting", yet in each case the CEO's of those banks got major bonuses at year end. If you think I am wrong, just think about what you pay in ATM fees alone. The biggest ripoff of all time. These fees alone generate billions, yes billions, in profits used to do what? Pay greedy bonuses. And having seen these changes that effect you the customer, they could care less about customer service. You don't matter. They are ripping us all off and we do nothing about it because they don't have to. And as a result they have schooled Congress how to do it. Get elected and do nothing because the public makes no one accountble. GREED plain and simple!

August 07, 2012 at 9:52 am

As my wife would tell me what if the balloon were to go up? Not having a place to go and do banking could be a serious blow. The internet is a great pathway to get some business transactions, but business needs to remain customer focused and encourage customers to pay a visit to the branches because people can make the difference many times in the general business of humans.

A A Rohlik
August 07, 2012 at 9:39 am

...and this, too, the only reference to cash was the brief aside noting the reduction of B of A's ATM sites. Less cash being used is another data point to add to the equation. A personal comment: Thank you, Banker for holding on to the human aspect of finance on the person to person level. Your persistence may make you a survivor in the small bank industry. In the not too distant future your bank might become known as a Boutique Bank. It sounds tame now, but it can be a point of pride to be a Boutique Anything at all. Boutique guitars, cars, coffee... Why not a Bank to be a specialty service provider?

August 07, 2012 at 8:04 am

In a word it is technology. Technology is the same reason that employment will never be as robust as it was in the past. Many jobs that once required humans are now pretty much done by computer. Technology is a double edge sword. It makes everyday life infinitely easier but eliminates many jobs as a byproduct.

sheila spence
August 07, 2012 at 3:43 am

Sixth paragraph, second sentence - needs another proof read?

Randy K
August 07, 2012 at 2:22 am

I'm sadly afraid this idea is on target. I've always been a person who goes to my bank, talks to and meets the people in my bank. But these days my bank seems has so much turn over, by the time I get to know someone they are gone. Now with the new smartphones, my bank will allow me to take a picture of a check, click send, and its deposited in my account. I'm a one person self employed shop. So when a customer gives me a check, I usually wait till I get several, then make the the deposit. Sometimes a week or 10 days might go by, and I still have not deposited my checks... So with the new smart phone, I could get a check and in a couple of minutes, its deposited, and I'm back to work.. No more getting everything ready, closing down to run to the bank. At minimum I save an hour. I have not got the smart phone yet to do this. But it is now giving me a reason to justify having one. I can really see how this will change banking as we have known it. And for sure more branches will close as a result.
I understand that even paying someone will become simpler with these phones in that you may just have to click the phones together or something and I can pay you out of my account... Yes, our world is changing... Faster than some of us might like!
Just look how much money the PO has lost with most of us no using it to send our bills any longer.

August 06, 2012 at 11:31 pm

I love technology.

August 06, 2012 at 11:12 pm

I agree with Bankerchic and Jeff. I work at a bank and I take pride in the fact that I get to know my clients and they enjoy coming into the branch. There are definite benefits to being able to have online banking but knowing your banker has it's benefits too. I had a client who was vacationing at Disney when his wife's purse was stolen with his checkbook in it. He had his debit card still so I was able to close out their old account and open a new one for them and attach the husband's debit card to the new account. The change was seamless to them. The wife didn't have the same experience with her bank, she came in and opened an account with me the next week. I was able to do this for my clients because I KNOW them, if they never came in I would not have been able to. If you are comparing your bank to the DMV you are banking at the wrong bank. My clients are like friends and family to the associates at my branch, we attend their funerals and we send each other Christmas cards. My branch is nothing like the DMV! Jeff probably banks with us!:)