Banks had been consolidating their branches before the coronavirus pandemic and focusing on cities where there is employment growth.
Since the pandemic, many have closed more branches permanently while others reduced their hours until recently.
The number of bank branches will decline by 20% to 30% after the pandemic because they will not be necessary, says Tom Smythe, a professor of finance at Florida Gulf Coast University.
The pandemic has forced many consumers to adopt online banking for deposits or payments and to use ATMs for cash withdrawals. Banks have also reduced their branch networks “significantly because people have been forced to move to electronic banking,” he says. “When they do, they generally become comfortable with it.”
Why Do Banks Close Branches?
To improve their profit margins, banks have slashed the costs of building and maintaining bank branches along with staffing them with tellers and other employees. Overhead or noninterest expense is “one area they truly control,” Smythe says.
Some banks with several branches in one area have closed some branches because the amount of consumers going to the drive-thru or inside the bank has declined for years, even before the pandemic. Customers are increasingly choosing to bank online or on the phone and via ATMs.
Banks must inform the Office of the Comptroller of the Currency, the Federal Reserve Board or the Federal Deposit Insurance Corp. 90 days before they close a branch and tell customers at least 30 days in advance. The National Association of Federally-Insured Credit Unions says credit unions are exempt from notification rules, but says state-chartered credit unions usually have to report to a state authority.
Wells Fargo says 18% of its branches are temporarily closed, and hours on Saturday remain limited. Customers can use drive-thrus and access some services by appointment only, says Julia Tunis Bernard, a Wells Fargo vice president.
HSBC Bank USA announced in February the bank has consolidated 80 branches, says Matt Klein, HSBC head of communications, retail banking and wealth management.
“We are refining the focus of our retail business to better serve the needs of the U.S.-based international population and globally mobile and affluent consumer population,” he says.
PNC Bank closed 160 branches in 2020 and plans to close another 120 in 2021, PNC CEO William Demchak said during the September Barclays Global Financial Services Conference. During the third quarter, 75% of customers did not use tellers for the majority of their transactions since 67% of total deposits took place via ATMs and mobile apps. But “nearly all lobbies” have been open since Oct. 5, says Marcey Zwiebel, senior vice president and director, corporate public relations for PNC.
“PNC has been consolidating its branch network over the last several years,” she says. “There are many options for banking with PNC via online, mobile, ATM and phone. These shifts in the way customers are conducting their banking transactions are important inputs that inform our branch consolidation decisions.”
What Should You Do if Your Branch Closes?
Customers in the habit of using bank branches can seek out other branches that are nearby, find ATMs that are on the same network or see if your bank will provide a rebate on ATM fees. You might even consider opening an account at a bank that has an operating branch near your home or office.
Consumers can deposit paper checks at ATMs. They are a good option since they are available 24 hours a day, and many bank ATMs are located inside supermarkets and retailers such as Target.
Changing to direct deposit can also help employees avoid the need to visit a bank branch or ATM to make a deposit. Another option is to download your bank’s mobile app to a smartphone, take a photo of the check and make a mobile deposit.