Banks are closing branches at an astonishing rate. Banks in the United States have shuttered 439 branches in the third quarter alone, the S&P Global data show. That was up from 199 in the prior quarter.
Accoridng to a report by American Banker, this also marked the highest quarterly level of net closings since the first quarter of 2022, when banks turned out the lights on 960 locations. The latest quarterly decline extended a 15-year trend. In 2009, there were nearly 100,000 branches in the U.S.
But this trend isn’t necessarily an indication of anything being wrong. Some analysts say banks are investing more in their online platforms, where customers prefer to handle an increasing number of their banking transactions. As a result, fewer branches are needed, and banks are continuously cutting their physical footprints in response, pushing some of the savings to their bottom lines and reinvesting the rest in evolving technology. With 24-hour ATMs, people can also get cash on demand without needing a teller. Many of the transactions can now be done with limited human interaction.
Human interaction in general dropped during the COVID-19 scamdemic, as medical experts told people other humans were a danger to them. But, in all fairness, online banking was surging before the mainstream media started to panic the masses about getting a cold.
U.S. Bancorp was in the top 10 with 23 net closings in the quarter. While the company is far from abandoning branches, its advancing digital capabilities enable it to cover more territory with fewer locations, President Gunjan Kedia said. –American Banker
“Our strategy focus is to create density in the highest growth areas within our current footprint rather than use branches to expand out of our footprint,” Kedia said during the company’s latest earnings call. “And the reason for that is that we have built some very good, strong digital capabilities that allow us to deliver our services nationally.”
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