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The closing of bank branches keeps making the news and with reason. The last year has seen an enormous amount of closings and this year is set to surpass it. No big bank seems to be exempt from making this decision towards digitalization, Wells Fargo, Chase, Bank of America and more are all making this decision seemingly quickly after having seen the transition that occurred in the pandemic.
The transition is being so brutal that in just over a month, 79 physical locations of banks will shut their doors, in some cases leaving customers without even ATMs and forcing them to drive to locations an hour away to do any kind of transaction in person.
The most affected areas
While not all states have been hit as hard in this new round of closings, not all of them had the same number of branches to begin with. California seems to be the state that has been hit the hardest, maybe because it had the most amount of clustered branches, but here we detail some of the closings it was hit with just from Bank of America, and we can see that some regions have been left without barely any resources. From April 20 to June 1 alone, 20 locations were shut down in the state.
It is believed that the process started when JP Morgan closed 18 of its Chase banks, followed by Wells Fargo which closed 17 of theirs. The past weeks has seen Wells Fargo close even more locations, with eight of its in-person banking locations shutting down with no plans to relocate them. Not to be left behind, Bank of America shut down 16 branches in California, New Jersey, and Florida. In total, four hundred bank branches are expected to shut down their operations without being replaced by the end of 2024.
Reasons why
But this trend is not new, it has been brewing for almost 20 years at this point. Ever since the start of online banking, the access to bank branches has been restricted more and more. In fact, according to the Federal Deposit Insurance Corporation, a U.S government corporation supplying deposit insurance to depositors in American commercial banks and savings banks, 2009 was the last year when there was a surplus of bank branches opening. And the numbers don’t lie, according to the institution, in 2009, there were around 100,000 bank branches operating across the country, today there are less than 80,000.
This move has impacted customers the most, with most of them having to either learn how to use the tech and spend hours on the phone with representatives or just choosing to capitulate and waste the time and gas necessary to travel to a different location, usually further away.
Steven Reider, founder of Bancography, corroborated this in statements made to the Daily Mail, “Banks are willing to close a branch that isn’t really overlapping any other branch on the gamble that customers are willing to drive a little bit further. I think Bank of America has leaned into that more than the other large banks have.”
Unsurprisingly, 2021 and 2022 were the years with the most bank branches closed, probably as a direct result of the COVID-19 pandemic and the mix between lockdowns, hybrid working models and the “new normal” we all tried to adjust to. But 2023 continued the trend with more than1400 bank branches closings, which, while a very large number, was still less than the previous years, with 2021 holding the record after nearly 3,000 bank branches shut its doors.
Hope for bank branches?
However, not every bank is choosing to make this “cost savings change”, some financial groups such as PNC Bank are choosing to do the opposite. They are planning to invest $1 billion in renovating existing offices and building new ones, increasing their 2,300 branch portfolio between now and 2028.
PNC president Michael Lyons stated that, despite the rise of online banking, “Branches will always have an important role.”
