Chase Bank, along with nine other banks, has filed to close 60 branches in one week, according to a report by The US Sun. The move is part of a trend of branch closures that has accelerated during the pandemic, as more customers shift to online banking. However, some experts warn that the branch closures could pose risks for customers, especially those who rely on physical access to banking services.
Why are banks closing branches?
The main reason why banks are closing branches is to cut costs and increase efficiency. According to a study by Novantas, a banking consultancy firm, branch closures can save banks up to $1 million per year per branch. The study also found that branch visits have declined by 50% since 2010, as more customers use digital channels to conduct their banking transactions.
The pandemic has also accelerated the trend of branch closures, as social distancing measures and lockdowns have reduced foot traffic and increased online banking adoption. According to the Federal Deposit Insurance Corporation (FDIC), banks closed 3,324 branches in 2020, the highest number since 2015. The FDIC also reported that the number of bank branches in the US fell below 80,000 for the first time since 2005.
Some of the banks that have announced branch closures in 2020 and 2021 include:
- Chase Bank, which plans to close 300 branches by the end of 2022, representing 9% of its network.
- Wells Fargo, which plans to close 250 branches in 2021, after closing 329 branches in 2020.
- Bank of America, which plans to close 250 branches by 2024, after closing 204 branches in 2020.
- PNC Bank, which plans to close 160 branches in 2021, after closing 120 branches in 2020.
- Citibank, which plans to close 10% of its branches in North America by 2023, after closing 37 branches in 2020.
How do branch closures affect customers?
While branch closures may benefit banks in terms of cost savings and efficiency, they may also have negative impacts on customers, especially those who rely on physical access to banking services. Some of the potential risks and challenges that customers may face include:
- Reduced access to cash and deposits. Customers who need to withdraw or deposit cash may have to travel farther or pay fees to use non-network ATMs. Customers who need to deposit checks may have to use mobile apps or mail services, which may have limits or delays. Customers who need to access safe deposit boxes may have to relocate or forfeit their valuables.
- Reduced access to financial advice and assistance. Customers who need to open accounts, apply for loans, or get financial guidance may have to rely on phone or online channels, which may not offer the same level of personalization and trust as face-to-face interactions. Customers who have complex or urgent issues may have to wait longer or face more difficulties to resolve them.
- Reduced access to financial inclusion and literacy. Customers who are unbanked or underbanked, such as low-income, elderly, or rural populations, may have fewer options to access affordable and convenient banking services. Customers who are less familiar or comfortable with digital banking may have more barriers to learn and use online tools and platforms.
What can customers do to cope with branch closures?
Customers who are affected by branch closures can take some steps to cope with the changes and protect their financial interests. Some of the possible actions that customers can take include:
- Reviewing their banking needs and preferences. Customers can evaluate their banking habits and preferences, such as how often they visit branches, what services they use, and what channels they prefer. Customers can then compare their needs and preferences with the available options and alternatives offered by their banks or other financial institutions.
- Exploring digital banking options and opportunities. Customers can learn and use the digital banking options and opportunities that their banks or other financial institutions offer, such as online banking, mobile banking, mobile check deposit, peer-to-peer payments, and robo-advisors. Customers can also take advantage of the benefits and features that digital banking can offer, such as convenience, speed, security, and rewards.
- Seeking financial education and empowerment. Customers can seek financial education and empowerment from various sources, such as their banks, financial advisors, community organizations, or online platforms. Customers can also leverage financial education and empowerment to improve their financial literacy, skills, and confidence, as well as to achieve their financial goals and aspirations.