There’s value in a bank branch
Who needs physical banks anymore? When you can do everything from cash checks to get a mortgage online these days, it’s no wonder that the number of brick-and-mortar bank branches even in the fast-growing Houston area shrank by 6 percent from 2010 to 2016.
Well, at least in the short term, a bank can be missed.
Research has shown that, well into the internet era, residents of low-income neighborhoods have been more likely to get a mortgage at a better interest rate when a bank branch is nearby. Even in areas where branches are relatively common, a branch’s disappearance can make a longstanding dent in loans to local small businesses.
People who don’t have bank accounts — which are easier to get when you can walk into a branch and ask questions — are more likely to use expensive services like check cashing and payday loans.
That’s why the National Community Reinvestment Coalition, a Washingtonbased advocacy group, put out a report this month with a more negative take on the declining number of bank branches. Although the 1977 Community Reinvestment Act prevents financial institutions from withdrawing completely from lower-income neighborhoods, the closures have disproportionately affected those areas, expanding the number of “banking deserts.” Shrinking northern cities like Baltimore, Chicago and Detroit lost 15 to 25 percent of their branches.
Danyelle Jones, business relations liaison for Houston’s Neighborhood Recovery Community Development Corp., has experienced that contraction firsthand. Until recently, she was a branch manager for Capital One, but her locations were converted into “select service centers,” which have more automated services and require far fewer employees.
The bank also closed 25 branches across Texas, as Capital One encourages its clients to use its digital platforms to do things like cash checks and make deposits. Jones says that will happen eventually, but some customers aren’t
quite there yet.
“I feel like the transition is going to happen, but it’s happening too fast,” Jones said. “In the community, people are not as receptive to digitizing their banking as banking employees are. People say all the time, ‘No, I want to come in, I want to talk to someone.’ ”
To help ease the transition, Jones said, bank employees need to take every branch visit as an opportunity to teach clients how to use online services themselves, with the knowledge that the branch might not be around much longer to help. The problem is, big data breaches have made many consumers reluctant to entrust their personal information to a computer.
“People are so afraid of it,” she said. “And I get it. Things go wrong all the time.”
But human bankers aren’t infallible either, she noted. And soon, consumers might not have much of a choice.