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Questions and Answers
What is the reason behind the closure of physical bank branches?
How many banks closed in 2020?
Who is most affected by the closure of bank branches?
What can happen to a community when a bank branch closes?
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What practical functions do bank branches serve for local merchants?
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What can people turn to when bank branches close?
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What can help fill the void of bank closures?
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What is the challenge when it comes to bank closures?
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What can be affected by bank closures?
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What is the impact of bank closures on some customers?
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Study Notes
- Banks are closing physical branches due to declining foot traffic and a shift towards online and smartphone banking, which has been accelerated by the pandemic.
- 3,324 banks closed in 2020, and the trend has continued in early 2021.
- For some customers, the loss of a bank may be a minor inconvenience, but for others, it can be a significant challenge.
- Closure of a bank branch can lead to a community becoming a bank desert, where residents have to travel further to access banking services.
- Rural residents are especially likely to do their banking in person, with more than 40% visiting their bank at least 10 times in the year before the pandemic.
- Bank branches also serve important practical functions for local merchants, such as depositing cash, getting change, or applying for a business loan.
- Closure of bank branches can lead some people to turn to more expensive alternatives, such as check-cashing stores and payday lenders.
- Alternatives to physical bank branches, such as credit unions and discount ATMs, can help fill the void.
- The challenge is to ensure everyone has access to convenient, affordable financial services.
- Bank closures can have ripple effects on communities, local businesses, and access to capital.
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