Taylor Scott
While banks closing down is not a new phenomenon, the pace of closures has accelerated in recent years, with the Federal Reserve Bank of Philadelphia noting that the trend began during the Great Recession but was significantly exacerbated by the COVID-19 pandemic. Since 2020, the rate of bank branch closures in the U.S. has doubled, with banks citing reasons such as the growing dominance of digital banking, the high cost of running smaller, rural locations, and the need to cut costs due to reduced foot traffic during the pandemic. While this shift to digital banking may be a cause for concern for those with limited access to the internet, experts assure that it does not change the security of bank accounts, and that money is safe due to Federal Deposit Insurance Corporation (FDIC) protection.
| Characteristics | Values |
|---|---|
| Reason for bank closures | A shift to digital and online banking |
| Who is affected by bank closures? | Americans with limited access to the internet and online banking |
| Number of closures | 32 banks closed nationwide in 2025 |
| Banks affected | Wells Fargo, U.S. Bank, PNC Bank, Bank of America, JPMorgan Chase, Flagstar Bank |
| Government involvement | Federal Deposit Insurance Corporation (FDIC) protection |
| Notice period | Banks must mail a notice to customers at least 90 days before the proposed closing date |
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What You'll Learn
Banks are closing due to the shift to digital and online banking
The rise of digital and online banking has significantly impacted traditional banks, leading to a wave of branch closures across the industry. This trend is not unique to a particular region, as countries like the United States and Australia have witnessed similar shifts. The preference for digital banking among customers has prompted banks to reevaluate their strategies, leading to a reduction in physical locations.
In the United States, the shift to digital banking has resulted in a notable decrease in the number of bank branches. According to S&P Global Market Intelligence, U.S. banks closed 2,118 branch locations between January and October 2023, adding to a 14-year trend of declining branch numbers. Major banks, including JPMorgan Chase & Co., Bank of America, and Wells Fargo, have all reduced their physical presence. This strategic shift aims to cut expenses associated with traditional brick-and-mortar offices and reinvest savings into digital capabilities.
Similarly, Australian banks have experienced a steady decline in branch usage, with customers increasingly opting for online platforms and apps. According to the Australian Banking Association, one major bank reported a 10% increase in digital interactions since 2019, alongside a 32% drop in branch usage during the same period. This shift in customer behavior has naturally influenced banks' investment strategies, leading them to prioritize digital services over maintaining extensive branch networks.
The move towards digital banking offers several advantages to customers, including lower fees, ease of access, and competitive savings accounts. However, it also raises concerns about accessibility and financial inclusion, particularly for those who rely on face-to-face service or have limited access to digital technologies. While banks recognize the continued importance of physical branches for specific services, the trend suggests that the industry is adapting to meet the changing preferences of its customers.
As the world embraces digital transformation, the banking industry is following suit. The shift to digital and online banking has accelerated due to various factors, including customer preferences, technological advancements, and cost-saving measures. While physical branches still serve a purpose, their role is evolving to complement the growing dominance of digital banking platforms. As a result, banks are closing some branches and reinvesting their resources in digital capabilities to stay competitive and meet the changing expectations of their customers.
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Customers are turning to mobile apps and online platforms
Customers are increasingly turning to mobile apps and online platforms for their banking needs, with 55% of bank customers using apps on phones or other mobile devices as their primary method of managing their bank accounts. This shift towards digital banking has been accelerated by the convenience and accessibility offered by smartphones and mobile applications.
A survey by the American Bankers Association found that consumers are highly satisfied with their bank's digital banking channels, with 96% rating their online and mobile app experience as "excellent", "very good", or "good". The same survey also revealed that 83% of respondents believe that innovations and technological improvements in the banking industry are enhancing access to financial services for all Americans. This is particularly significant for unbanked households, as digital banking options provide them with greater access to the banking system and its associated benefits.
Mobile banking applications offer customers a range of features and functionalities that enhance their overall experience. For example, users can securely upload documents required for account verification, loan applications, or other processes directly through the app, streamlining the customer journey. Additionally, mobile apps provide customers with real-time notifications, the ability to set up alerts to protect against fraud and scams, and convenient methods for sending and receiving payments from friends and family.
The shift towards mobile and online banking has also been driven by the closure of bank branches across the country. Experts attribute these closures to the increasing adoption of digital and online banking, as well as the high cost of running smaller, more rural locations. While the reduction in physical locations has raised concerns about access to banking services, particularly for those with limited internet access, experts assure that it does not compromise the security of bank accounts.
As the banking industry continues to evolve, it is clear that mobile apps and online platforms are becoming increasingly central to how customers interact with their financial institutions. Banks that invest in creating intuitive, user-friendly, and secure digital experiences will be well-positioned to meet the changing needs and expectations of their customers.
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Banks are working to save money by closing physical branches
Banks are closing physical branches across the United States, with high numbers of closures in California, Illinois, Michigan, New Jersey, New York, Ohio, Pennsylvania, and Texas. In New York, for example, there were 35 proposed bank branch closures as of March 22, 2025. Bank of America, Wells Fargo, JPMorgan Chase, and Flagstar Bank are among the major banks planning to shutter numerous branches.
This trend is driven by several factors. Firstly, there has been a notable decline in demand for in-person banking services. The development of mobile and online banking platforms has reduced individuals' reliance on physical branches as they can now conduct various transactions, such as check deposits, bill payments, and account management, from the convenience of their digital devices. The shift towards digital banking is particularly pronounced among younger generations, with Generation Zers visiting bank branches less frequently than Baby Boomers.
Additionally, banks are also working to save costs by closing branches. As they expand through mergers and acquisitions, banks may find themselves with overlapping locations, making it less viable to maintain all physical branches. By consolidating their operations and reducing their physical footprint, banks can cut down on the high costs associated with running multiple locations.
While the number of physical bank branches is decreasing, it is important to note that banks are not completely eliminating their branch presence. Bankers recognize that even tech-savvy customers sometimes prefer physical offices for financial advice, opening accounts, or managing significant transactions. Furthermore, branches in high-traffic areas serve as valuable billboards for the bank's brand. As such, banks continue to strategically open new branches in neighborhoods with booming populations or fast-growing economies while closing others.
Overall, the trend of banks closing physical branches reflects a broader shift in the industry towards digital banking and cost-saving measures. While this may impact Americans' access to in-person banking services, experts reassure that it does not change the security of their bank accounts, thanks to Federal Deposit Insurance Corporation (FDIC) protection.
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The pace of bank closures has accelerated in recent years
The pandemic-related measures brought branch traffic to a standstill, driving an increased adoption of digital banking services. This trend is expected to continue, with Generation Zers visiting bank branches an average of 3.6 times per year, while baby boomers averaged 4.6 visits annually. The move towards digital banking is further accelerated by the cost-saving measures implemented by banks, such as Provident Financial Services, which closed 15% of its physical branches after acquiring a competitor.
Mergers and acquisitions have also contributed to the surge in bank closures, with banks trimming their physical footprints to reduce overlapping staff, services, and facilities. This has resulted in a rebound of M&A activity, with 210 deals announced in 2021, up from 112 the previous year. While some banks are eliminating their physical presence entirely, others are strategically opening new branches in high-traffic areas to function as billboards in key markets.
Despite the rapid pace of closures, experts assure that there is no reason to distrust banks or worry about the safety of funds. The Federal Deposit Insurance Corporation (FDIC) provides deposit insurance to protect individuals' money in the event of a bank failure. Additionally, better regulation in the wake of the 2007-2009 financial crisis has made the American banking system more resilient.
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The government's role in bank regulations and the law
Bank closures are becoming increasingly common as the world moves towards digital and online banking. This shift is particularly pronounced among younger generations, with Generation Zers visiting bank branches an average of 3.6 times per year, while baby boomers averaged 4.6 visits annually. This trend has been accelerated by the high cost of running smaller, more rural bank branches. However, this does not mean that traditional banking is any less trustworthy. In fact, according to experts, better regulation in the wake of the financial crisis of 2007-2009 has made the American banking system more resilient.
The government plays a significant role in bank regulations and laws. In the United States, for example, there are several regulatory bodies that oversee the banking industry. These include the Office of the Comptroller of the Currency (OCC), which is the primary regulator of banks chartered under the National Bank Act, and federal savings associations chartered under the Home Owners' Loan Act of 1933. The OCC's regulations are derived from these acts and can be found in the Code of Federal Regulations. It has the power to take enforcement actions against financial institutions for violations of laws, rules, or regulations, as well as for unsafe or unsound practices.
Additionally, each state has its own regulatory agency responsible for chartering and supervising state banks and foreign banks located within the state. These state-chartered banks must follow all applicable state laws and regulations, and if they take out deposit insurance or become a member of the Federal Reserve, they must also comply with federal regulations. National banks and federal savings associations are among the most highly regulated institutions in the country.
The US Commodity Futures Trading Commission (CFTC) is another independent federal agency that regulates transactions in "Commodity Interests" executed or booked in the United States. Furthermore, the Federal Government has taken steps to ensure fair banking for all Americans, addressing issues such as politicized or unlawful debanking and directing banks to flag individuals or transactions related to specific political beliefs or activities.
While the government has a crucial role in regulating banks and ensuring the safety of customers' money, the specific actions and effectiveness of these regulations can vary across different countries and jurisdictions.
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Frequently asked questions
Banks are private actors, but they are heavily regulated by the government. While the government does not directly cause banks to close, government policies and regulations can influence the banking industry and impact their operations. For example, during the 2007-2009 financial crisis, the government implemented regulations to improve the resilience of the banking system.
Bank closures are often a result of a shift towards digital and online banking, as well as a decline in foot traffic due to the pandemic. Banks are also working to save money by closing branches, as maintaining physical locations can be costly.
Your money is protected by the Federal Deposit Insurance Corporation (FDIC) in the event of bank failure. FDIC insurance covers up to $250,000 per depositor and ensures that your money is safe, even if the bank closes.
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