Banking, finance, and taxes
Will American Banks Close Thousands of Branches?
Published:
Last Updated:
JPMorgan Chase & Co. (NYSE: JPM) will cut roughly 300 branches over the next two years. Some reasons for its decision extend to all banks that support large numbers of locations. Supporting customers via physical locations is a dying business. The J.P. Morgan decision is just the beginning.
Several banks have thousands of branches. Among the largest are America’s national banks: Wells Fargo & Co. (NYSE: WFC), Bank of America Corp. (NYSE: BAC) and Citigroup Inc. (NYSE: C). Among less well-known banks, U.S. Bancorp (NYSE: USB) and PNC Financial Services Group Inc. (NYSE: PNC) have about 3,000 locations each.
The costs to maintain branches are about the same as for any retail outlet. These include rent, people, communications systems and logistics. Shuttering a bank branch could mean dozens of employees out of work, but could also save the bank substantial money. Each of the largest banks based on number of branches need tens of thousands of people to support them.
Online banking is available universally, and ATMs are nearly ubiquitous. Many customers do not use branches at all anymore. Forcing others to do the same should not be hard, though a branch closed is a convenient location lost for many people. Even important transactions like mortgage applications do not require a physical visit. Branch services have been cut down to a few services, which include people and businesses who want to watch deposits made and want cash delivered to them in person.
The five largest banks based on retail locations have a total of over 23,000 locations. As with any retail business, some locations are more profitable than others. Some almost certainly lose money. That makes a maintaining a large branch system financially untenable. If anything, banks that continue to struggle to maintain strong earnings have only a few ways to improve margins. That means the least efficient parts of their businesses will continue to be pruned. Bank branches have to be high on those lists.
ALSO READ: Why Warren Buffett Wants to Own the Credit Card Space
Is Your Money Earning the Best Possible Rate? (Sponsor)
Let’s face it: If your money is just sitting in a checking account, you’re losing value every single day. With most checking accounts offering little to no interest, the cash you worked so hard to save is gradually being eroded by inflation.
However, by moving that money into a high-yield savings account, you can put your cash to work, growing steadily with little to no effort on your part. In just a few clicks, you can set up a high-yield savings account and start earning interest immediately.
There are plenty of reputable banks and online platforms that offer competitive rates, and many of them come with zero fees and no minimum balance requirements. Click here to see if you’re earning the best possible rate on your money!
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
