In the past month, branches from major American banks such as Wells Fargo, Chase, and Bank of America have shut down across various states.
This wave of closures comes as many customers manage their finances online, reducing the need for physical bank locations.
In just six weeks, 79 branches of U.S. banks have closed their doors as the banking industry shifts more of its services online. This trend reflects a broader move away from traditional brick-and-mortar operations, driven by the rise in digital banking.
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According to the Daily Mail, over 400 bank branches closed in 2024, indicating that the reduction of physical locations will likely continue. California has been hit hardest by these recent closures, with 20 branches shutting down between April 20 and June 1.
Major Banks Bet on Online Services, Close Physical Branches
This significant number of closures highlights the ongoing changes in how consumers choose to bank in an increasingly digital world.
Leading national banks like US Bank, Bank of America, and Wells Fargo increasingly rely on online banking to meet customers' needs. This shift is seen as a response to the growing trend of digital banking adoption among consumers.
Running a freestanding bank branch is costly, with annual expenses averaging around $2.6 million, as reported by Bancography, a consulting firm based in Alabama that provides advice to banks. Banks find that closing branches can lead to significant financial savings in light of these high costs.
Steven Reider, the founder and president of Bancography, has indicated that banks are closing branches that do not overlap with others, taking a risk that customers are prepared to travel further to reach their nearest branch.
The U.S. Sun stated that Reider pointed out that Bank of America, in particular, has embraced this strategy more aggressively than other major banks.
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Reider also discussed the impact of Bank of America's history of mergers, which has resulted in several branches in rural locations when the banking industry is moving from rural areas to
urban centers. He highlighted the ongoing urbanization trend in the U.S., noting that every census since 1910 has shown an increase in the urban population.
This shift has decreased demand for banking services in rural markets, making these branches less viable.
Banks Shut Down Branches Across States
The trend of closing bank branches is gaining momentum, as evidenced by the recent actions of major banks. JP Morgan initiated this move by closing 18 Chase bank branches, followed by Wells Fargo, which has shut down 17 of its locations.
In the past week, Wells Fargo went further by closing eight in-person banking facilities. Continuing the pattern, Bank of America has also reduced its physical footprint, closing 16 branches across California, New Jersey, and Florida.
AS reports that Chase led the trend last year by closing over a hundred branches, while her banks followed suit, expanding their online services as they decreased the number of in-person locations.
This move towards online banking often occurs without customer consent, leaving some facing longer distances to receive in-person support. The trend underscores the banking industry's evolving strategy to adapt to consumers' growing preference for digital services.
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