Digital alternatives may rid the world of some of life’s inconveniences, but for the banking sector, a trip to the local branch is not yet replaceable. Although consumers are increasingly turning to digital banking services, many still cling to the services of their brick-and-mortar counterparts — the stalwarts of the finance industry. Nevertheless, the number of bank branches is lower now than at any other time in the last decade and continues to decline.
Banking execs, who have been keen to close physical locations to save considerable setup and operating costs, are worried that closing more branches will backfire by leading to lower revenues. Digital banking among U.S. consumers is catching on only at medium intensity, which may not warrant the aggressive branch closings seen in Germany, France and Canada. According to FDIC Chief Economist Richard Brown, the notion that “branch offices are dinosaurs and going away appears to be substantially overstated.”
$2 to $4 million| The cost of setting up a bank branch, with annual operating costs of between $200,000 and $400,000
$1 million | The annual profit of a bank branch at full potential after a decade
93,283 | The number of bank branches still open at the end of 2015, according to the FDIC
25% | The decline in FDIC-insured banks since 2009
6% | The percentage decline in bank branches since 2009