Bank branches to disappear by 2034: new research

A new study has reinforced the view that traditional banks are on the decline, citing advancements in technology and internet access for the continuing trend.

The study, provocatively titled “The Death of Banks,” analyzes the current trends and factors around the decline of banks, an issue that has garnered increasing attention over the past few years.

Key insights noted by the study include a 6.5% decline in bank branches since 2012: This trend would see total number of physical banks nationwide fall to fewer than 16,000 by 2030 and all branches closing by 2034.

The study was conducted by N26, a German neobank headquartered in Berlin, and Eric Taylor, a director of UX research at Varo Bank, a mobile-only neobank.

A neobank is another term for an online or internet-only bank. While the study may be seen as a self-promotion, the trend has garnered attention from traditional institutions.

The New York Fed published a paper as far back as 1995, noting that “the traditional business of banks … has declined.”

The NY Fed paper raised concerns that traditional banks may end up taking on riskier loans or non-traditional activities to remain profitable in the subsequent years, perhaps a premonition of the financial crisis that arose just over a decade later.

Three of the five largest banks in the U.S. closed branch locations at a rate of greater than 7% over the period between 2014 and 2018, Smart Asset reported.

The Varo/N26 report found that 86.9% of American banking consumers use online services, with slightly more – just under 89% – of millennials preferring digital services.

The greater access and easier payment services offered by online banks were cited as the top reasons that consumers turn to online banking.

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