The typical town’s main drag seems to have a bank in every third or fourth storefront, often with branches from the same institution within a few blocks of each other. But do consumers really need banks to be as ubiquitous as coffee shops?
It’s been a long time since I’ve interacted with a live bank teller. I don’t visit banks all that frequently, and when I do I use the ATM for deposits and withdrawals, even if I’m there during regular business hours when human assistance is available. Based on the scene inside typical bank branches—rows of empty cubicles where bank staffers presumably should be working to arrange loans and deal with customer account issues, one or two tellers where there are space for 10 to be working—my preference for online banking and ATMs seems to be common. Often, the line at the ATM is longer than the one to see a real teller inside, and the people waiting for the ATM don’t seem to mind.
You don’t need an MBA to realize that, even if they are staffed with skeleton crews, all of these bank branches require money to operate—rent, insurance, utilities, wages, and so on. And, in light of the banks’ never-ending strategizing to make profits, you’d think that someone might question the nonstop expansion of bank branches. To raise revenues, instead of just instinctively raising fees on customers like the banks have been doing in recent years, a bank might want to consider trimming its own costs by closing a few branches that customers don’t seem to need all that much.
Over the last decade and a half, however, banks have been opening new branches faster than others have been closing. Until now, that is.
The Boston Globe reports that more than 1,400 bank branches have closed in the past two years, and from June 2009 to June 2010 the overall number of bank locations has decreased 1 percent nationally. After closing 150 of its branches last year, Bank of America plans on shuttering an additional 10 percent of its locations (about 580 of 5,800) by the end of 2014.
Does this signify the beginning of the end of the neighborhood bank branch? Only if we’re talking about an “end” that’ll be decades in the making. Even after BofA’s scaling back, it’ll still operate well over 5,000 branches in the U.S.
At the same time, the Globe reports, banks such as JP Morgan Chase and Citibank have plans to expand their branch networks. So even if the bank branch seems like a dying breed, many large banks apparently find branches profitable and worthwhile enough to keep them open and as available as Starbucks or McDonald’s.
If you’re paying fees to these banks, however, in the form of monthly account fees, ATM charges, overdrafts, and whatnot, you should realize that it’s your money paying to keep these branches open. And if you don’t really use these branches, what are you paying for?