Major US banks, including Bank of America, US Bank, and Citizens, are rapidly closing branches, with 222 closures reported in the first two months of this year.
This trend, reported to the Office of the Comptroller of the Currency (OCC), signals a broader shift as banks exhibit growing confidence in online banking capabilities.
Bank Closures Surge: Bank of America, US Bank, and Citizens Lead the Way
Online Banking Confidence Spurs Closures: Potential 1,300 Branches to Shut Down in 2024
As confidence in online banking capabilities grows, American banks are on track to close approximately 1,300 branches this year.
The closures reported to the OCC in January and February indicate a strategic move by banks to leverage cost savings, with each freestanding bank branch costing around $2.6 million annually.
Banking Evolution: Rapid Closure Strategy for Cost Savings
Bank of America’s Bold Move: Leaning Into Branch Closures for Significant Savings
Bank of America takes a bold step in closing branches, with 92 closures in just eight weeks.
This strategic approach may result in substantial savings, potentially nearing $100 million in two months.
The bank’s willingness to close branches not overlapping with others demonstrates a calculated gamble on customers’ willingness to travel slightly further for banking services.
Strategic Gamble: Bank of America’s Aggressive Branch Closure Strategy
Urban to Rural Conversion: Bank of America’s Merger History Shapes Branch Locations
Bank of America’s merger history has led to branches in rural locations, reflecting an industry trend of an “urban to rural conversion.”
With every census since 1910 showing an increasing proportion of Americans in urban areas, demand in legacy rural markets diminishes.
Banks, including Bank of America, are now consolidating their focus on dominating key cities.
Shifting Landscape: Urban Dominance Becomes Banking Priority
Banking Giants Eye High-Growth Metros: Chase, Fifth Third, and PNC Expand into Key Cities
Major banks like Chase, Fifth Third, and PNC are strategically expanding into high-growth metros, aiming to consolidate markets and dominate a handful of cities. Chase’s aggressive move into Kansas City, Fifth Third’s expansion into Charlotte, and PNC targeting Austin exemplify this trend.
Huntington also announces plans to expand into Texas through Dallas this week.
Strategic Expansion: Banking Giants Target High-Growth Urban Centers
Credit Unions on the Rise: Branch Expansion Challenges Traditional Banks
While traditional banks close branches, credit unions are expanding their footprint and currently account for around 18,000 branches across the US.
Unlike banks, credit unions are in a growth phase, aggressively branching into markets abandoned by larger banks. This shift introduces a significant and meaningful competitive force in the financial sector.
Rise of Credit Unions: A Growing Competitive Force in Banking
Consumer Share Dynamics: Credit Unions Pose Continued Competition to Banks
Credit unions’ aggressive branching and entry into markets vacated by traditional banks position them as a significant and meaningful competitive force in terms of general consumer share.
As banks undergo reduction phases, credit unions continue to grow, offering services similar to traditional banks.
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