Fintech Study Predicts Bank Branches Will Be Extinct By 2034

A recent study by fintech company Self Financial (Self) predicted that bank branches could be extinct by 2034 if the current footprint reduction trends persist. The study measures branch numbers between 2000 and 2018, and focuses primarily on increased branch closures since 2012.

“We believe we have the model of the future⎯a light branch footprint, seamless digital capabilities and a network of partners that expand our reach to hundreds of million of customers,” stated CitiBank CEO Jane Fraser, according to a Banking Dive article covering the study.

Notably, the rate of branch closures doubled from 0.81 percent per year from 2012 to 2015, to 1.6 percent between 2015 and 2018. The study shows that the United States had 83,060 branches in 2012, but 77,647 branches in 2018, a net loss of 6.5 percent, or 5,413 branches. Self’s estimate of a three-year trend in closures could be accurate if 2,000 branches are closed in 2021.

The trend data is broken down from state to state; Self found that forty states have experienced declines in branch numbers between 2012 and 2018. Florida lost the most branches over six years with 529 closures, while Maryland lost the largest percentage of branches during that time, with a 12.62 percent net loss.

Additionally, Self surveyed more than 1,100 consumers to measure their concerns on what needs to change in the banking system. Nearly 70 percent surveyed said they trust banks with a physical presence, while 47 percent said they distrust online-only banks. The largest appeals for physical branches were easier access to cash and in-person financial advice.

“Personalization will become more important, and artificial intelligence will make it possible to offer banking products tailored to individual needs, at better prices,” said a spokesperson for N26, a Germany-based neobank.

The study does not specifically mention the COVID-19 pandemic as an accelerator for branch closures, but institutions like KeyBank and U.S. Bank have welcomed a quicker branch reduction.