Don't be Surprised to See a Bank of America Branch Shut Down Near You

If a Bank of America branch just shuts down near you, don’t be surprised. The 2nd Quarter 2015 financial earnings report by the top 4 banks in the US have brought to light some interesting results on number of branches and mobile banking usage. In the 4th quarter of 2014, Brian Moynihan, CEO of Bank of America had said, 9% of all checks deposited by customers in the fourth quarter came from snapping pictures on smartphones or tablet computers. This figure didn’t even exist in 2012. This implies the shift to digital banking initiated by Bank of America and its customers. Over the past 3 years, Bank of America has been cutting down the number of branches. In 2013, the branch total declined by 189. In the past one year, this big bank giant further trimmed the number of branches by 234 (4.6% decrease). As evident in Figure 1, the number of branches Bank of America had in Q2 2014 was 5023 and the number of branches it has in Q2 2015 is 4789. The same graph indicates the rise in mobile banking customers as reported in the bank’s quarterly financial statements. In the past one year, mobile banking customers at Bank of America increased by 13.5%. This shows the significant acceptance of digital banking by customers and the bank.

Figure 1: Data from Bank of America's website; Chart created by LTP

Figure 2: Data from JPMorgan Chase's website; Chart created by LTP

Similar trends were analyzed from Q2 2015 financial reports of JPMorgan Chase. The number of JPMorgan Chase branches declined by 132 in the preceding one year. But its mobile banking users increased by a little more than 22%. Citibank’s quarterly financial supplement for 2nd quarter of 2015 revealed that it cut down its branches by almost 15% in the preceding one year. In Q2 2014, Citibank had 912 branches and in Q2 2015 Citibank had 779 branches. The number of mobile banking users isn’t made available by Citibank. However, its website does mention a 50% increase in mobile banking clients over 2013 levels. This data definitely indicates a positive trend in mobile banking users at Citibank. Other big banks in the US like US Bank also closed down 10 of its branches in the US in the past year.

It seems that Bank of America is leading the race in cutting down physical branches. Banks, in general, are understanding the importance of digital banking. However the question to answer here is whether we even need branches? According to a research paper on millennials by The Financial Brand, 53% of millennials still prefer banks as one of the banking methods. The same research on millennials or Gen-Y also states that 72% of millennials last visited their bank branch to deposit money. Are physical branches still an important part of the American banking culture? A study by found that 3 in 10 Americans haven’t visited a bank branch or credit union branch in the last 6 months whereas 50% of Americans have visited a branch to conduct their personal financial business in the past 30 days. These figures do indicate the necessity of physical bank branches. A fewew still people prefer an in-person contact with someone at a bank when they have financial problems or issues with their bank accounts. It is interesting to see the increasing adoption of mobile banking on the other hand. Banks are trying to reduce their operating expenses by closing their branches because doing so also means cutting down the number of employees. Will Bank of America, JPMorgan Chase and the other big banks in the US keep reducing the number of branches, and until when? Tell us what you think @letstalkpaymnts on Twitter.