Bank branches aren’t quite dead — yet

USA TODAY International Edition - - MONEY - John Max­field

The bank in­dus­try is strug­gling through the same tra­vails as the re­tail in­dus­try. Just like e-com­merce is caus­ing re­tail­ers to shut­ter stores, the growth of dig­i­tal bank­ing is re­duc­ing the need for bank branches.

Bank of Amer­ica of­fers a case in point. Since the be­gin­ning of 2009, the na­tion’s sec­ond-big­gest bank has closed 1,634 branches — one out of every four that it started with. In the lat­est quar­ter alone, it closed 31 lo­ca­tions.

The abil­ity of Bank of Amer­ica to close branches at this pace with­out alien­at­ing cus­tomers has been made pos­si­ble by the pro­lif­er­a­tion of on­line and dig­i­tal bank­ing. Bank of Amer­ica has 23.6 mil­lion ac­tive mo­bile cus­tomers, with 21% of its de­posit trans­ac­tions now hap­pen­ing via its mo­bile bank­ing app. That equates to the work of ap­prox­i­mately 1,100 branches, as the bank’s chief fi­nan­cial of­fi­cer noted.

But while Bank of Amer­ica and other large banks are ag­gres­sively con­sol­i­dat­ing their branch net­works, the in­dus­try at large is still at the very be­gin­ning of this trend. The to­tal num­ber of bank­ing of­fices in the United States (banks plus their branches) topped out at just more than 90,000 in 2008, the same year as the fi­nan­cial cri­sis. Since then, the to­tal num­ber has dropped by only 5%.

This doesn’t mean that the bank branch is safe. The point in­stead is that we’re still at the very be­gin­ning of the down­ward trend.

John Max­field owns shares of Bank of Amer­ica. The Mot­ley Fool has no po­si­tion in any of the stocks men­tioned.

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