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America's brick-and-mortar banks are vanishing

A Citibank ATM is seen in Los Angeles, California, in this March 10, 2015 file photo. REUTERS/Lucy Nicholson

Next time you want to make a quick errand to a bank, you might have to travel a couple of more miles than you’re used to. This month Bank of America (BAC) said it has 23% fewer branches and 37% fewer workers than it did in 2009, according to a CNNMoney story.

Bank of America had 4,689 branches at the end of the first quarter of 2016, down from the average of 6,100 in 2009 while the workforce downsized to 68,400 from 107,900 in 2009. As more consumers get comfortable doing all manner of financial transactions online and on their phones, mobile banking has become increasingly common. In 2015, one in 10 adults in the US began using mobile banking for the very first time – amounting to 25 million new mobile bankers, according to Javelin, a research firm. And last year marked the first time weekly mobile bankers exceeded weekly branch bankers.

Other major banks are experiencing similar shifts. Here’s a look at how the largest US banks have cut back on their physical branches.
In the last six years, bank branches in the US fell overall by 6.3%, according to FDIC data: As of this month there were 93,283 bank branches, down from 99,550 in 2009.

Source: FDIC
Source: FDIC

Despite the broad pullback of brick-and-mortar branches, some major banks like PNC (PNC), JPMorgan (JPM) and Wells Fargo (WFC), have seen the reverse (as shown in the table above). For Wells Fargo, the near-doubling of bank branches from 2009 to 2010 was the result of its merger with Wachovia in the wake of the financial crisis (the merger was announced in 2008, with the first retail bank conversions taking place at the end of 2009). Similarly, PNC acquired the US retail banking operations of the Royal Bank of Canada in 2011.

“Basically there is that push toward mobile banking and the general thought process is: more convenience is good for more of the newer generation,” James Noe, financial analyst at Sageworks, a financial information company says. (Millennials have adopted mobile banking at a higher rate than older generations, of course.)

In addition to added convenience for consumers, banks themselves are saving money by closing branches and migrating transactions to digital channels. According to a 2013 Javelin report, an in-person transaction costs the typical financial institution $4.25, while a mobile transaction costs about 10 cents, “so the move to mobile is key to a lower cost delivery strategy.”

“We can think of how Uber came about in the taxi industry, people just needed a taxi right away, but it was really hard to get one. They might have to travel couple of miles to get a cab. Same with banks – so maybe they have to deposit their checks, but they don't have to drive 5 miles from their home anymore; they can just take a picture that goes directly into other deposit accounts,” Noe says.

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