Academic journal article ABA Banking Journal

Don't Confuse Bank Branch Closures with Fewer Banking Services

Academic journal article ABA Banking Journal

Don't Confuse Bank Branch Closures with Fewer Banking Services

Article excerpt

Policymakers have recently voiced concerns over bank branch closures and the effect they could have on low-income at-risk communities. Banks serve a critical role providing the financial lifeblood for their communities. While banks have begun to shift branch strategies to face technological, economic and demographic changes, they continue to take this responsibility seriously. Despite concerns focused on low-income communities, the vast majority of branch closures have occurred in upper- and middle-income neighborhoods and urban areas. In fact, many banks, particularly community banks, are opening more branches on net than they are closing.

From 2013 to 2018 (the earliest available Community Reinvestment Act designations for census tracts on S&P SNL) 16,371 bank branches were closed. Several factors have contributed to this trend--primarily changes in demographics and consumer preferences. Most notably, Americans are leaving rural areas for booming metro areas and their suburbs.

Moreover, technological advancements have changed the way consumers interact with banks. A recent survey found that 7 in 10 Americans use a mobile device to manage their bank account at least once per month, and 46 percent do so more than three times a month. Adoption is particularly strong among the tech savvy millennial generation. As millennials overtake baby boomers as the largest generation, particularly in urban areas, banks must adapt to higher demands for flexible, instant and increasingly internet and mobile based financial services. …

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