Self-Serve and Digital-First Channels Can Populate ‘Banking Deserts’

Banks have been fine-tuning their branch efforts as the pandemic recedes, shuttering locations in some markets and building new outposts in others.

The Federal Reserve said in a recent blog post that in some cases, “banking deserts” have emerged, impacting 12 million individuals in the U.S. The Fed has drawn up a “map” that denotes where those deserts are.

The deserts are described as locations where banks are outside a certain radius: two miles for urban communities, five miles for suburban communities, and 10 miles for rural communities.

“Overall, the number of bank branches declined by 5.6 percent from 2019 to 2023,” the Fed noted in the post.

“By asset size, large banks ($10 billion to $50 billion) and very large banks (greater than $50 billion) had the most closures, dropping by 11% and 12.6%, respectively. Community banks, which have assets of less than $10 billion, increased their footprint by adding 1.1% more branches,” as detailed in the report.  At the same time, broadband is “hard to come by” in 39% of those deserts.

Separately, among the initiatives in place to expand broadband access is the Broadband Equity, Access, and Deployment (BEAD) Program, which provides roughly $42 billion to expand high speed internet access across all 50 states and U.S. territories.

Separate data, this time from Pew Research Center, reported at the beginning of 2024, found that 95% of adults say they use the internet. As many as 90% have a smartphone and 80% say they subscribe to high speed internet at home.

The Mobile Shift, By the Numbers

The raw material’s there, then — at least in terms of technology and improving access to the broadband “rails” that deliver digital banking — to see a greater use of mobile channels even where physical branches may not be in close quarters. And, indeed, as PYMNTS Intelligence spotlighted in the wake of first quarter earnings reports from banks, the shift is ongoing.

Bank of America logged 3.4 billion digital logins, with digital sales accounting for half of its total sales. The bank reported a significant uptick in digital households, reaching 748,000 in the quarter, or 86% of its installed base. In addition, Truist Financial Corp. said that digital transactions grew 13%, totaling 76 million, while mobile app users climbed 8% year over year to 4.9 million.

As for the community and regional banks that are the typical bastions of financial services that focus on these communities, PYMNTS Intelligence has found beyond the brick and mortar conduits, digital and mobile-based offerings are gaining momentum with consumers. The data shows that 80% of all CUs report a positive return on investment resulting from their payment innovation efforts.

Furthermore, 90% of top-performing CUs saw an increase in member satisfaction with their mobile app over the past year, while 83% observed a rise in the number of mobile app downloads. And as detailed here,  25% of members want their CU to innovate personal loans, and 21% want innovations on auto loans in the next three years. CU members are also hungry for BNPL innovations, with 17% saying they want their CU to innovate BNPL in the next three years.