If bank branches in your area appear to be disappearing at a rapid rate, it’s not your imagination. A whopping 539 physical branches shuttered their doors in the first half of 2024, according to a report by the Daily Mail. Further, if the current trend continues, an analysis conducted by Self found that physical bank branches could be extinct by 2041.
Why it’s happening
While some branch closings result from cost-cutting measures, it appears the majority of branch closings have more to do with how far digital banking has advanced in a relatively short period. After all, the internet didn’t become mainstream until the mid-1990s, and the first smartphone wasn’t introduced until 2007.
Since then, many banking services traditionally offered at branch locations have been made available online and through mobile apps. Today, if you want to deposit a check, it’s as easy as taking a photo of the front and back and depositing it into your account using a mobile app. If you want to apply for a car loan, there’s no reason to visit a branch because you can handle the entire transaction online.
Although plenty of financial changes can be traced back to COVID-19, internet and mobile banking are not among them. By the time 2020 rolled around, people were already aware of the numerous ways they could manage their banking business without leaving home.
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Americans learned they could manage their money while on a road trip, in the middle of an ocean cruise, or while flying to Europe. There was no reason to schedule a visit to their local bank branch because they had all the services they needed at their fingertips.
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How Americans feel
It’s said that change of any kind can be difficult for humans to handle. After all, our brains are wired to prefer familiar pathways. Anything familiar feels easy and convenient, so it’s reasonable that some consumers still prefer doing business in person at their local bank branch. But that’s
not true of everyone.
According to an American Bankers Association study, these are the most preferred banking methods in the U.S. today:
- Mobile app: 55%
- Online banking: 22%
- Bank branches: 8%
- ATM: 5%
- Telephone: 4%
- By mail: 1%
It makes sense, given that most people seem to enjoy their banking experience more when they can conduct it in their pajamas. According to the same study, 96% of those asked rated their experience as excellent, very good, or good after using a mobile app to do business.
In an increasingly complex world, making any task easier is sure to be appreciated — 83% of respondents said that technology makes accessing financial services easier. The best banking apps are free to use but make your life easier.
What to look for in an online bank
If you’re unfamiliar with how online banking works, you may be surprised to learn how similar it can be to old-school brick-and-mortar banking. However, make it a point to investigate several banks before deciding if one is right for you. Here are some of the factors to consider:
- Is it insured? It’s critical to know whether a bank is FDIC insured (or NCUA insured, in the case of credit unions). While most online banks are, don’t assume this is the case.
- What is its fee structure? Online banks tend to have minimal fees, thanks to low overhead. Compare the fees of any online bank under consideration with the fees you’re currently paying.
- How seriously does it take security? Look for an online bank that requires multifactor authentication to access your account.
- What services does it offer? Some online banks offer basic services only. Look for an online bank with the services you’re likely to need.
- Will it reimburse ATM transactions? Some online banks partner with large brick-and-mortar banks to give you access to ATMs, but not all do. See if the bank will reimburse you for all (or a portion) of the ATM charges you incur.
- Does it accept cash deposits? Some online banks accept cash deposits via an ATM. Others require you to transfer funds from a traditional bank, deposit the funds using a cashier’s check via mobile deposit, or use a retail partner like a convenience store to make the deposit. Ensure that the deposit process is convenient for you.
- How’s the customer service? Online reviews can clearly show how bank customers rate customer service.
- What do reviews say about its app? If you’re using an online bank, the quality of the bank’s mobile app is critical. Check out reviews on the app store.
- Does the bank provide alerts? Finally, you want to know if the bank offers alerts whenever suspicious activity is suspected on your account.
While it’s difficult to imagine a country with no brick-and-mortar bank branches, it’s equally difficult to imagine a world without online and mobile banking. There really is something to be said for convenience.
