What’s happening to bank branches?

In 2009, the number of branches in the US peaked at about 100,000. In 2010, the number dropped by 1% to 99,000. This was the 1st recorded drop in the number of bank branches.

While banks will continue to open new branches to fill a tactical/geographical void in their delivery system, the absolute number of branches has begun a long term decline.

It would be easy to argue that the reduction is due to the difficult economic environment and that is clearly an important factor (and you can expect to see the larger banks become even more aggressive in branch closures), but the real reason is a very positive one—customers are rapidly adapting to new technologies and delivery methods.

Most Americans have access to a personal computer (if not at home, most libraries have them available). Currently about ½ of Americans have a smartphone. With advanced applications and sophisticated security, virtually every activity formerly conducted at the branch can now be conducted remotely, with mobility, and in the time of your choice.

 
It is not a stretch to say that in the next 15-20 years the smartphone will replace most of the banking transactions currently conducted by check or debit/credit card. The power of these mobile devices gives the consumer greater power than ever in determining how to “bank”

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Some may lament the decline of the physical branch. Many more will welcome the freedom provided by technology and won’t pay to subsidize a branch network. Branches become more strategic to the banks and less tactical to the consumer.

The branches are declining—long live the branches.