Technology: More Than 4,000 Bank Branches Closed

Remember the introduction of the ATM was going to replace bank tellers? No? Well that is okay, it was a long time ago when they came out. To be honest I do not remember that either.

What I do recall is how that was thrown up in my face when I said things such as the bankers are cooked (an article from as far back as 2018). The idea was that bank tellers did not lose their jobs in droves. In fact, they only grew in number over the last 30 or 40 years.

Well, that is coming to an end. The reason why I knew that the banking industry was going to suffer a huge reduction in numbers is because of digitization. It is a rather simply process. Digital platforms are a lot less expensive to run. There is no way for companies to operate on a physical basis.

The transition started with the introduction of FinTech about 20 years ago. Since that time, many aspects of banking were taken over. The most notable example is mortgage origination. At one time, this was dominated by the banks. In 2018, for the first time, more than half the mortgages in the U.S. originated outside the banks. Applications such as RocketMortgage™ did a terrific job taking this business away from the banks.

It was not a difficult thing to do. To start, they operated 24/7. Also, since it was done, at least initially, in the digital realm, the fees were much lower. This devastated the banks where were still under the old model.

Now we have the next step in the evolution.

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Source

Branch Closings

The banking industry closed over 4,000 branches in 2021. This was offset by the opening of 1,000 new ones as some banks entered new markets. We saw a net closing of almost 3,000 branches in the United States alone. If we figure 250 working days, that is 120 branches closed per day.

We are looking at an industry that is in decline. Closing of branches is not a sign of expansion. Certainly, as we will see, the shift to online is having an impact. However, that not the only reason.

Bank mergers hit a recent high, one that stretches back 15 years. This is a sign of a maturing industry. When consolidation takes place on a massive scale, the industry is starting to feel the effects.

The branch closures also come as banks consolidate, with merger and acquisition deals in the sector topping $77 billion in 2021, the highest level since 2006, according to S&P Global.

“As consolidation continues and there are overlapping branches when deals are approved, there’s no need to have two branches on Main Street,” Cassidy said.

Here we see part of the reason for the closures. It is true, mergers create redundancy which has to be cleared out. Not only do we see this with branches but it also means that people in accounting, marketing, and other duplicate divisions also lost their jobs.

In short, the industry is getting smaller.

Of course, mergers are not the only reason for all these closures. In fact, the previous record year was 2020.

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Source

Shifting To Online

This is a process that started a while ago. However, the last couple years saw it ramp up.

Here is what was stated about 2020:

While the trend has generally been toward net closures since 2008, U.S. banks and thrifts closed 3,324 branches nationwide in 2020 and opened 1,040, according to S&P Global Market Intelligence data, which does not include temporary bank closures, such as those caused by the pandemic. One industry observer expects the acceleration of branch closures to continue throughout 2021.

Source

This analyst had the old crystal ball working on this one. Indeed, 2021 saw another massive jump.

The reality is people are doing more banking online, even through the traditional entities. This is something that is only going to continue.

“We anticipate that the downward trend in branches will continue for a number of years ... as more of the transaction-orientated aspects of banking are done digitally,” Gerard Cassidy, head of U.S. bank equity strategy at RBC Capital Markets, told CNBC.

Source

Each day we are seeing those who are technological resistant either dying or retiring (or both). This means the percentage of the population that is engaging with technology grows. As the years pass, those who stick to the old ways are massively decreasing in number. This has a host of ramifications on companies.

In this instance, the need for physical bank branches is diminished. Millennials do not see a reason even to enter a bank. They are adept at using payment applications and banking online. Here we see where the generational shift is having an impact.

By the end of this decade, it is likely that more than half the Baby Boomers will have died. Couple that with the fact that almost all of the Silent generation will be gone and we can see how the two most technology resistant generations are going to be scaled down greatly.

All of this is happening with cryptocurrency still in its infancy. It is safe to say that the impact of this industry on banking is not being felt yet. Over the next few years, however, as the entire spectrum of cryptocurrency starts to fill out, we could see another attack vector on the traditional banking industry.

The trend is already in motion, one that is not likely to reverse course.


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Ive noticed several bank of America branches by me become unmanned\just an ATM even though it has a store front...one of them was even a huge new facility, just built a year or two back

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By me, a BB&T is closing up. I am not sure if they merged with someone else or not. But either way, one of their branches on a main road is going away at the end o the month.

From the numbers, this is happening all over the place.

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another thing I noticed was the lack of coin machines in banks. I saw a sign that there's a coin shortage and yet you can't drop in your coins to get larger bills or a receipt to deposit the credit. I think it's a move to eliminate coins 1st to get people used to getting rid of physical money. The next move will be CBDC's and Social Scoring.

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The cost of coinage is actually a loss. It costs more to make than the face value on a lot of them. Plus much of it ends up in drawers and on the ground anyway.

Paper money is not going away anytime soon but I can see coinage disappearing. That is something that is a hassle and banks in particular really dont want to deal with.

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If Terra achieves it's goal of being a bank which it's doing a really good job at then they are finished. Yesterday's post of Yotta enabled someone to start their own bank and offer savings better than banks! WTF. Risky if Terra collapses or their interest rates decline but I guess that's why they didn't aim for too high payments.

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The title of the post forced me over thinking about people who trusted those banks and deposited their hard earned money. Anyways, informative blog indeed and feeling bad that bankers are cooked!

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They didnt lose their money. These are just branches. Plus in the US, the FDIC insures all deposits up to a certain amount (I think $300K).

So nobody lost, other them employees losing their jobs.

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Well, I'm glad that customers didn’t suffer for shutting down those branches. Thanks sir for ensure this matter.

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Digitalization is definitely taking over and banks can very well be replaced, Maybe years from now 20 or 30 we will not be using physical money anymore.

Overall it is a informative and a great post.

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There's a possibility of that but before physical money is evicted, proper cryptocurrency education and awareness should be put in place.

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Yes, that should be the correct thing to do, but the way I see it it's not happening anytime soon in most countries.

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Yeah because those sitting at the table of the Fiat system feel threatened with cryptocurrency. Just like how radio manufacturers felt when Television was introduced.

However, if they don't educate, people will still learn about the tech somehow.

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That is like saying Internet education and awareness.

The reality is people adopt technology over time. It becomes easier for people. This is especially true with the generations that are starting to take over. The Millennials all understand tech as does those following.

With the Boomers declining, the learning curve is lowered.

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Yeah, with time (maybe years), people will learn about the technology and eventually adopt it. It is only then we can say that physical money will be evicted.

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Maybe years from now 20 or 30 we will not be using physical money anymore.

That is very likely simply due to generational change. The time period you mentioned is another generation. It means most of the Baby Boomers will be gone by then.

The younger generations are not utilizing cash. Even Gen X is a credit/debit card generation.

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Even though banks can make huge profits but it depend upon masses, It is very hard to run and maintain a bank. Most of the revenue come from the loans they give and from credit cards. But if they don't have many customers due to big rival bank. Small banks will suffer and also goes in debt.
And now after Digitization if they don't move towards it and adopt it. They will be in huge debt. Big banks can do easily as they have more money and can get easily adopted any new technology. :)

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The cost of running physical branches is indeed burdensome. It requires a lot of ongoing cost without much profit. The fact is few use physical branches anymore. With the shift to online, it is impossible to miss how this is trending.

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I can't remember the last time I went inside the bank, I barely go there at all.

Almost all my financial transactions are automated.

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I remember the last time I did and I wanted to cry. Transactions that would take 3 seconds with a hive wallet would take nearly an hour because of the signatures and offices you have to enter.

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I get a couple checks a year. And even then I go to the drive thru.

If I was forced, I would download the damn app and do it with my phone but I am too lazy and dont have enough of a need.

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There has also been considerable consolidating in the banking world. There used to be thousands of independent banks in small towns. These have been systematically rolled up into just a few mega banks.

While the loss of tellers is sad, the loss of independent banks is extremely troubling.

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While the loss of tellers is sad, the loss of independent banks is extremely troubling.

Not really troubling since it is the plight of a mature market. The reality is the only way to make money is with size. Since local banks survived basically lending to small businesses, as those started to diminish, smaller banks couldnt survive.

It is no different than most other industries. It is also a sign of how things are declining in banking overall.

20 years from now, the industry will be like newspapers. A few hanging on but a shadow of what they use to be.

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Online banks are definitely the future. I don't really think most of these physical stores make much sense. Even before the pandemic, there were people shilling banks like Ally bank because they have no physical stores which cuts down overhead and allows them to give better interest rates. Of course this is nothing compared to the amounts we can get off crypto but better than the mainstream banks.

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Millennials are very accepting of online only banks. They could care less about physical locations.

It is only due to the Boomers and Gen X that they even exist. Since the former are starting to die off in bigger numbers, the branches time is very limited.

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I have notice a lot of banks closing here in Nigerians and they now replaced by most of these online banking but I know all this can’t save banks. If you know a lot about crypto it will be difficult for you to save lot of money in banks nowadays. Unless the banks change their ways

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The reality is people are doing more banking online, even through the traditional entities. This is something that is only going to continue.

I agree totally with you and from my area, we're gradually adopting full digital banking. For instance, in Nigeria, digital technology has not only affected the closure of some banking outlets, but has also created jobs for unemployed youths. Most unemployed youths are now operating as POS (Points of Sales) attendants and are being paid for the services they offer. As some are experiencing redundancy, others are opportune to cash out from the situation.
Thanks for your sharing. I'll also right about digital banking from the Nigerian perspective and I'll love to tag you in that post. Hope you're okay with it.

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Cryptocurrency will do banks what web2 did not post offices. The saying is already coming to reality. There's no gainsaying that digitization is far better than the traditional systems such as physical banking. More so, cryptocurrency provides a better way to store funds so, why won't it be preferred? I think we will see more banks closing in the near future because their use is diminishing by the day.

It will be wise if some banks shift to operate more online than offline.

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In my view, the big banks will end up being front ends for DeFi. They will be the feeder system of their clients into decentralized platforms. The banks will get a cut since they are dealing with people too lazy (or lack the knowledge) to do it themselves.

But the industry is going to be radically different in 20 years.

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A famous quote by Bill Gates comes to mind;

Most people don't need banks, they need banking services.

The crypto industry is a little bit too honest for it's on good. Banks have been prancing around pretending like they have the interest of their victims customers for many years, thus giving off the impression that they're trustworthy.

Crypto, on the other hand, let's you know from the beginning that if you snooze, you get cooked.

When people get tired of being fed bullshit, crypto will take eminence.

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Banks are going to have a tough time staying relevant. A few of the larger ones will adapt. However, we are already seeing the decline of the smaller ones. Just like smaller newspapers were the first to bite it.

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Exacta. Newspapers and radio stations are becoming obsolete. It's only a matter of time.

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It will be a generation before we see full elimination. The older generation still is into newspapers at least.

But as they die off, so do subscriptions.

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I didn't know this saying by Bill Gates, thanks for sharing...indeed he is absolutely right.

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yes this is what i been saying as i described in this video

this is why bbd coin will replace many of the banking services.. in our vision you'd have your social media integrated with your banking services free transactions all around and every account receiving a citizens dividend similar to how you own your bank through credit unions etc.,

Did you know that banks like bank of america value your accounts at $4000 for every person and your social media accounts some are north of $400 each. bbd coin will scale and incentivize people by providing all these services and no other coin can boast that as they'll never get the masses of accounts.

eventually the price of the coin will stabilize like doge coin once did. .now doge is an abomination. instead of price appreciation the focus will then be on cd's and programmable interest we won't need the coin price to go up.. the sheer scale under metcalfe's law will stabilize the price however to get to that point you first gotta have enough incentive to get people there.. we have it the other coins don't

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Amazing that we're here to see the slow death of banks. With more and more people opting to do online-only banking(me)... It's inevitable. The coincidence that cryptocurrencies have blasted off and started to go more mainstream is pretty interesting as well. I'm not saying we're killing the banks, I'm just saying it's interesting that these 2 things are happening in unison.

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Well it is a mature industry that is reaching consolidation. The transition online means they are having to compete in a new arena.

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This massive closure of banks is happening all over the world, in Venezuela this is also happening and only government controlled banks are surviving, but eventually they too will succumb.

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Yes it is a global situation. I wrote the article of the events in the US since that is what the stats are for.

But it is a universal situation.

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Noticed the shrinkage over the years especially on my travels to the UK. I still have accounts over there and my main branch was shut down and now everything I do is telephonically anyway. Hate the apps though even though they are convenient. Just don't see much point in having a bank account as their use cases are drying up for me personally.

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The more that is held in crypto, the less reason to even deal with banks. They will end up only being on and off ramps to most people.

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I think this is most likely possible plus maybe there will be other avenues open up like COTI which is a crypto/fiat bank. They are not available to American users for staking currently as they want to pass all requirements and regulations first. I think this will happen and then they will explode.

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I cannot remember the last time I entered a bank because I haven't needed to. Most of my transactions are done on my phone from my crypto wallet to my bank or vice visa.

Banks are employing more call centre representatives than tellers. This goes to show the shift in banking services. People would rather address their bank issue via an email or phone; money payment can be instantous via our phones and as more countries and cities go cashless the fewer banking halls we need. Those in customer care can work remotely, reducing the pressure or demand for houses in urban areas. We can go on and on and on...

The point is the will be a massive shift in terms of how businesses run, how banks run and it will change a lot of things (for the better I suppose) .

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And what happens when the phoning generation dies out and the app people take over. There go the call centers.

It is a process not only in banking but all industry.

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In fast food and retail, Cashiers are going to go the way of the 8 Track Tape. Fast food restaurants have those kiosks just click the pictures and swipe your card order placed. Those self-checkouts are getting better and better.
Raising the minimum wage will make replacing entry-level positions with digitization much more affordable.

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Interesting the data you provided about the banks in the USA that have closed their branches. Also in Italy this process is happening. Unicredit, Italian banking group, in 2021 has announced a plan to close 450 branches. I think online banking is only going to get bigger and bigger. I know young guys in their 30s who have opened accounts on online banks and don't go to bank branches anymore.

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