Is digital banking killing physical bank branches? How much truth is there to the longtime fear that online banking will replace consumer interaction with bank branch tellers? Well, a lot — at least, so it seems from a Wall Street Journal report indicating that banks are shutting down more branches now than they have in the past few decades.
According to the report released earlier this week, more than 1,700 bank branches were shut down in the last 12 months, ending in June 2017.
That’s “the longest stretch of closures since the Great Depression,” the report said.
Most of these closures have been attributed to falling foot-falls and the decreasing need of tellers thanks to ATMs and more recently, digital banking. But all is not to blame on banking’s digital makeover: the financial crisis was cited as another leading factor along with high maintenance costs particularly in non-profitable rural markets.
Based on the report, since mid-2012 to June 2017, Capital One Financial cut 32% of its branches, SunTrust Banks cut about 22% and Regions Financial cut 12%. And for all three banks, the sharpest cuts came in the past year, according to the report. The larger banks have also been making these cuts (BofA cut 17% and Citigroup 32%), but primarily geared toward the corporations’ profits.
According to the report, BofA – for instance, closed (or sold, or consolidated) over 1,500 branches since 2009, lowering its overall expenses and contributing to the bank’s adjusted earnings in 2017 to its highest annual profit ever.
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