Report: Banks Closing Branches Across U.S

Advancements in technology and increased access to the internet have led to many changes in the lives of Americans over the past 20 years. From shopping to chatting with friends, there are no time limits or closing hours, but what impact have these changes had on people’s banks and banking habits?

Bank branches, once an integral part of Main Streets, have been closing at a rapid rate, particularly following the global pandemic. For some, online banking is challenging and they need to rely on physical branches. Despite this, the digitization of finances isn’t showing any signs of slowing down.

This research looks to understand the impact of the pandemic and the changing needs of banking customers, and how soon bank branches could be obsolete in America.

To better understand the future of in-person banking, researchers on behalf of Self Financial have analyzed commercial banking data from the Federal Deposit Insurance Corporation, with records dating back to 1934. Their research shows how many banks close each year, allowing analysts to project when the U.S. will be likely to lose its last brick-and-mortar bank.

In addition, the research has surveyed more than 1,000 Americans to find out what they thought about the future of banking, and whether they can envision a future where online and contactless banking becomes the norm.

Key statistics about banking trends in the U.S.

• If current trends continue, physical bank branches could be extinct in the U.S. by 2041.
• Since 2018, there has been an average of 1,646 branches closing each year in the U.S.
• California has seen the highest level of bank closures of any state, with 1,114 branches now closed in the last ten years, followed by Florida (1,091 closures) and Illinois (858 closures).
• When asked whether they thought the current banking system needs to change, over a third (69.9%) of Americans believe that it does.
• Almost two in five (39%) stated they had the most trust in banks with physical branches.
• When asked what bank branches are used for, nearly two-thirds use them for making a cash deposit (63.2%), with over half using the buildings to speak to an in person advisor (56.5%) and making a cash withdrawal (53.6%).

Historical banking trends across the U.S.

The research, which analyzed the opening and closing of bank branches according to data released by the Federal Deposit Insurance Corporation [1] Federal Deposit Insurance Corporation, ’BankFind Suite: Find Annual Historical Bank Data’ https://banks.data.fdic.gov/bankfind-suite/historical, found that between 2012 and 2022 (the latest data available) the number of commercial bank branches across the U.S. has decreased from 82,461 in 2012 to 69,590 in 2022.

A large number, 2,442, of those bank branches declining seems to be a fallout of the pandemic as this dramatic decrease occurs from 2021 and 2022.

Year	Total branches
2022	69,590
2021	70,314
2020	72,756
2019	74,721
2018	76,772
2017	77,821
2016	79,107
2015	80,537
2014	80,960
2013	81,658
2012	82,461
2011	82,045
2010	81,464
2009	81,918
2008	81,809
2007	77,968
2006	75,381
2005	72,321
2004	69,690
2003	66,971
2002	65,651
2001	64,378
2000	63,602
1999	63,032
1998	61,357
1997	59,641
1996	57,072
1995	55,656
1994	53,871
1993	51,840
1992	50,976
1991	51,388
1990	49,800
1989	47,429
1988	45,818
1987	44,813
1986	43,823
1985	42,718
1984	41,311
1983	40,548
1982	39,485
1981	40,500
1980	38,458
1979	36,521
1978	34,524
1977	32,836
1976	30,931
1975	30,069
1974	28,384
1973	26,403
1972	24,566
1971	23,080
1970	21,597
1969	20,149
1968	18,966
1967	17,884
1966	16,842
1965	15,698
1964	14,559
1963	13,445
1962	12,290
1961	11,307
1960	10,436
1959	9,615
1958	8,849
1957	8,191
1956	7,574
1955	6,906
1954	6,288
1953	5,801
1952	5,436
1951	5,119
1950	4,797
1949	4,529
1948	4,282
1947	4,095
1946	3,927
1945	3,895
1944	3,874
1943	3,743
1942	3,553
1941	3,515
1940	3,488
1939	3,455
1938	3,411
1937	3,380
1936	3,260
1935	3,112

Source [1] Federal Deposit Insurance Corporation, ’BankFind Suite: Find Annual Historical Bank Data’ https://banks.data.fdic.gov/bankfind-suite/historical

Bank branches compared to U.S. population

Another way of reviewing the bank branch numbers is to compare them against the population to see how many potential customers one branch is expected to serve.

Across the U.S., the latest data for population and bank branch figures suggests a continuation of a long-term trend which took shape following the 2008 financial crisis.

Following regulatory curbs by U.S. financial authorities, more than 800 independent banks closed between 2007 and 2013 [1] Federal Deposit Insurance Corporation, ’BankFind Suite: Find Annual Historical Bank Data’ https://banks.data.fdic.gov/bankfind-suite/historical as the recession of the early 2010s took hold. While the markets have recovered, the banking sector faces more existential change with the rise in popularity of online banking and the closure of brick-and-mortar branches.

As the data shows, this means the American consumer has fewer options should they need in-person services such as a loan or mortgage. In 2022, there were 4,715 people per branch — the highest figure since 1995.

Year	People per branch
2022	4,715
2021	4,604
2020	4,429
2019	4,302
2018	4,265
2017	4,187
2016	4,095
2015	3,995
2014	3,945
2013	3,883
2012	3,818
2011	3,810
2010	3,810
2009	3,745
2008	3,717
2007	3,864
2006	3,958
2005	4,086
2004	4,202
2003	4,332
2002	4,381
2001	4,426
2000	4,436
1999	4,326
1998	4,405
1997	4,490
1996	4,647
1995	4,722
1994	4,832
1993	4,973
1992	5,003
1991	4,907
1990	5,009
1989	5,204
1988	5,336
1987	5,407
1986	5,480
1985	5,570
1984	5,709
1983	5,766
1982	5,867
1981	5,666
1980	5,908
1979	6,162
1978	6,447
1977	6,707
1976	7,049
1975	7,183
1974	7,534
1973	8,026
1972	8,544
1971	8,997
1970	9,494
1969	10,059
1968	10,582
1967	11,111
1966	11,671
1965	12,378
1964	13,180
1963	14,075
1962	15,178
1961	16,246
1960	17,312
1959	18,495
1958	19,763
1957	20,997
1956	22,300
1955	24,027
1954	25,927
1953	27,613
1952	28,983
1951	30,255
1950	31,743
1949	32,941
1948	34,244
1947	35,196
1946	36,004
1945	35,925
1944	35,725
1943	36,532
1942	37,957
1941	37,952
1940	37,879
1939	37,881
1938	38,061
1937	38,114
1936	39,280
1935	40,890

Source [1] Federal Deposit Insurance Corporation, ’BankFind Suite: Find Annual Historical Bank Data’ https://banks.data.fdic.gov/bankfind-suite/historical [2] United States Census Bureau, ‘National Population Totals and Components of Change: 2020-2022’ https://www.census.gov/data/tables/time-series/demo/popest/2020s-national-total.html

State population compared to bank branches

With fewer brick-and-mortar branches across the U.S., where do Americans find themselves most isolated when looking for a branch manager? Despite a population of just 1.4 million people, Hawaiians find themselves sharing the fewest bank branches, with 9,797 people per branch.

However, it appears the same struggle is not felt in the Midwest, where five major states all have less than 3,000 people per branch. Despite nationwide closures, Nebraska’s Bank Association remains confident that its 168 banks across the state will remain open as of 2023, arguing that its local focus protects itself from the wider instability in the market. [3] KMTV 3, ‘Nebraska banks ensure customer confidence amid national bank closures’ https://www.3newsnow.com/news/local-news/nebraska-banks-ensure-customer-confidence-amid-national-bank-closures

Source [1] Federal Deposit Insurance Corporation, ’BankFind Suite: Find Annual Historical Bank Data’ https://banks.data.fdic.gov/bankfind-suite/historical [4] United States Census Bureau, ‘State Population Totals and Components of Change: 2020-2022’ https://www.census.gov/data/tables/time-series/demo/popest/2020s-state-total.html

Predicted extinction of physical bank branches

Based on the data from 2012 to 2022, using a polynomial regression model, the data predicts that if bank branches continued to decline at the accelerated rate they have been in the last decade, there could be no bank branches left by 2041.

Year	Bank branches
2022	69,590
2023	66,647
2024	64,181
2025	61,542
2026	58,732
2027	55,750
2028	52,595
2029	49,269
2030	45,771
2031	42,101
2032	38,258
2033	34,244
2034	30,058
2035	25,700
2036	21,169
2037	16,467
2038	11,593
2039	6,546
2040	1,328
2041	0

2012 was a turning point for physical bank branches in the U.S. and there have been declining numbers consistently every year since then. In this period, each year sees an average difference of 1,132 fewer branches across the country. This doesn’t mean 1,132 branches had closed, but that more branches closed than those that opened.

Based on that acceleration from 2012-2022 the model shows how bank branches could be extinct by 2041. While there is no certain method to predict the future, the use of the polynomial regression model allows us to see how the situation for U.S. banks could change in the coming years should current high-acceleration trends continue.

Which states will see the death of the banks soonest?

The data does suggest however that some states could see the absence of all bank branches much sooner than others.

Looking at the number of bank branches in 2022, 2012, and 2002, California has seen the highest level of bank closures of any state, with 1,080 branches now closed in the last ten years, followed by Florida (-1,056 closures) and Illinois (-823).

*Hawaii did not have historical data to be able to compare.

As the map shows, 45 states have seen a decrease in the number of bank branches from 2002 to 2022. The only states that have bucked the trend and have seen increases in the number of bank branches across this period are Nebraska (+20), Vermont (+17), Montana (+16), South Dakota (7), while North Dakota has seen no net change in that time.

States which will see fastest decline of bank branches

Based on the average closure rate for the last ten years for each area, using the same polynomial regression model, the states that are going to see the fastest level of all bank branches closing are predominantly based in New England. Connecticut, Maine and Vermont are all predicted, based on our research, to be branchless by 2031.

On the West Coast, Oregon’s bank branches will potentially suffer a similar fate; while New York, Virginia and California will see their banks’ physical presence expire by the mid-2030s. Under current trends, only two states - Wyoming and Pennsylvania will have in-person banking services survive into the 2080s.

Data note: not all states could be compared using this model due to patchy historical data, numbers that do not work with this type of predictive model, or states that exceeded the year 2100 in prediction.

Attitudes towards banking today

To understand Americans’ attitudes toward banking and the impact of the rise of competitor online banking, a survey was conducted on behalf of Self Financial, asking 1,046 Americans from across the U.S, what they think of traditional banking systems, how often they visit a physical bank and what they anticipate the future of banking to be.

Data was then compared against the same survey run in 2020, to understand how these have changed in the last three years.

Americans think banking needs to change now more than ever

When asked whether they thought the current banking system needs to change, over a third (69.9%) of Americans believe that it does. This is a substantial increase from the previous survey findings in 2020, in which less than half (46%) agreed the industry needed to change.

61% trust banks without physical branches the most

Interestingly, the trust across the different banking systems was relatively similar - when asked which of the following you have the most trust in, almost two in five (39%) stated they had most trust in banks with physical branches. However, a similar percentage (36.1%) claimed they had the most trust in online or website banking, and a quarter (24.9%) in app-based banking.

Those who thought physical banking was more trustworthy were asked why, and the following reasons were given:

1. Greater security - 58.5%
2. Access to in-person advice - 52.1%
3. Better access for those unsure when using technology - 48.1%
4. Easier depositing services - 45.6%
5. Easier checking services - 38.9%
6. Easier access to cash - 37.9%

Why do people use physical bank branches?

When asked what bank branches are used for, nearly two-thirds use them for making a cash deposit (63.2%), with over half using the buildings to speak to an advisor in person (56.5%) or making a cash withdrawal (53.6%).

This 29.4% decrease in people using physical bank branches primarily for cash is likely a result of the move towards a cashless society

Interestingly, in the 2020 survey, easier access to cash was the most common answer (53.7%), compared to just over a third (37.9%) in 2023. This 29.4% decrease in people using physical bank branches primarily for cash is likely a result of the move towards a cashless society as a result of the pandemic and businesses moving to card-only payments.

Although the majority of states have seen the number of bank branches decreasing, this research indicates that going to your bank in person is still very much part of day-to-day life for most Americans. When asked how often they visit a branch of their bank, over a third (38.4%) visit once a month, with one in ten (11.3%) visiting weekly and one in fourteen (7.3%) visiting their local branch near daily.

Concerns with online banking

While online banking continues to rise in popularity, it seems that there are still some concerns with using it as a main banking provider. When asked if there was anything that would put them off using online banking platforms, security concerns (46.5%) and the lack of free ATMs (46.4%) were the biggest reasons why potential customers were hesitant to make the switch.

The most common reasons why respondents were hesitant to use online banking platforms were:

• Security concerns - 46.5%
• Lack of free ATMs - 46.4%
• Lack of in-person interactions - 39.1%
• Concerns about federal insurance on money - 34.9%
• Unsure where money is located - 27.4%
• Unsure about using online platforms - 27%
• Unsure on how to deposit funds - 21.1%
• Confusion in accessing funds online - 20.7%
• Lack of access to the internet - 14.5%

Of those surveyed, just 7.9% claimed they had zero concerns with using online banking systems. However, the findings indicate that many Americans feel that online banking will soon overtake the more traditional commercial banks - with nearly three-quarters (73.2%) claiming that they believe online banking will outnumber traditional banks within the next twenty years.

Interest in online banking

When asked if they had considered opening an account with an online-only bank in the last twelve months, a third (33.3%) stated they had researched providers and opened an account, and nearly three in ten (29.2%) claimed they already had an online-only account.

Interestingly, our research found that over one in six (17%) already had an online-only account but wanted to switch to a bank with physical branches. This indicates that online banks are likely used as a secondary account, such as a joint account with a partner or as a way to track everyday spending.

Desired features of online banking

When asked what features the respondents said were most important in an online bank, nearly half (49.4%) want 24/7 access to their account. Having 24/7 ability to send and receive payments (46.6%) and free ATM withdrawals (45.7%) were also high priorities for potential customers. The most common features that users look for in an online-only bank are:

1. 24/7 access to your account - 49.4%
2. 24/7 access to send and receive payments - 46.6%
3. Free ATM withdrawals - 45.7%
4. Free deposits - 43.6%
5. Ability to access and manage accounts through a mobile app - 39.4%
6. 24/7 free advice and support - 36.4%
7. Federal insurance covering the account - 29%
8. Encrypted logins - 25.1%
9. Ability to use checking services - 23.4%
10. Spending tracking - 18.4%
11. Credit score tracking and updates - 17.8%
12. Offers or discounts from other companies -14.1%

Cryptocurrency banking

Although cryptocurrency has increased in popularity over the last decade, the research found that interest in virtual currency is mixed. Nearly two in five (39.6%) claim they would never use a crypto-based bank, and over a quarter (26.3%) don’t currently use a crypto-based bank but may consider it in the future.

Interestingly, three in ten (30.1%) claim they currently use a bank with cryptocurrency functionality - although crypto was once seen as only accessible to those on the dark web, mainstream banks have embraced it, with big players such as Goldman Sachs, Morgan Stanley, Chase, and Bank of America introducing the blockchain technology to its portfolios.

Banking in the future

As the data shows, traditional banks with physical premises are on something of a decline, however, that’s not to say the traditional banks (or companies) are going to soon disappear but they will still change.

According to various reports and commentary around the world in the banking industry technology is going to be the main driver in banking innovations and its long-term future. But what can customers expect to see?

Changes people may see in banking:

• More AI usage. With AI becoming more mainstream in 2023, largely thanks to ChatGPT, some banks will likely begin introducing technology like this into their offering. Some reports do however predict that many banks will face regulation issues because of this. [5] Forrester, ‘Predictions 2024: Banks Face A Boring, Yet Dangerous, Year Ahead’ https://www.forrester.com/blogs/predictions-2024-banking/
• A report from the Bank Administration Institute noted how staff are now ‘more focused on consulting with customers’ which could indicate a future push for more in-depth human interactions despite the fact there are less branches open and, therefore, fewer people to speak to. [6] BAI, ‘Transforming the branch experience’ https://www.bai.org/banking-strategies/transforming-the-branch-experience/
• Computing company, intel, expects that the next generation of ATMs will likely have biometric features and remote maintenance which should allow them to stay up-to-date, requiring less in-person requirements for upkeep. [7] Intel, ‘Why Smart ATMs Could Be the Future of Banking’ https://www.intel.com/content/www/us/en/financial-services-it/cloud/smart-atms.html
• Technology is expected to continue to be the core driver for banking growth, with PwC highlighting how ‘customers gravitate towards the largest, most personalized and convenient platforms’. It’s expected that banks will invest in better apps and use customer data to offer products specific to their needs more than ever before. [8] PwC, ‘Retail Banking 2025 and Beyond’ https://www.pwc.com/gx/en/industries/financial-services/publications/financial-services-in-2025/retail-banking-2025.html
• Digital currencies will likely gain wider acceptance, as of January 2024, the Federal Reserve is yet to make a decision on them, referred to as Central Bank Digital Currencies (CBDC). These are expected to become a part of banking in the future. [9] Board of Governors of the Federal Reserve System, ‘Central Bank Digital Currency (CBDC)’ https://www.federalreserve.gov/central-bank-digital-currency.htm

Methodology

Commercial bank data from Federal Deposit Insurance Corporation [1] Federal Deposit Insurance Corporation, ’BankFind Suite: Find Annual Historical Bank Data’ https://banks.data.fdic.gov/bankfind-suite/historical was reviewed to see the number of bank branches nationally and per state over time. Census data was used to compare bank branch figures to the respective state population. A polynomial regression model was used to show possible trends in bank numbers over time based on data from 2012-2022.

A separate survey was conducted on behalf of Self Financial in July 2023 polling 1,046 Americans who use banks (both physical and digital). They were asked questions about traditional banking and their opinions on the changing world of banking.

Sources

• ^[1] Federal Deposit Insurance Corporation, ’BankFind Suite: Find Annual Historical Bank Data’ https://banks.data.fdic.gov/bankfind-suite/historical
• ^[2] United States Census Bureau, ‘National Population Totals and Components of Change: 2020-2022’ https://www.census.gov/data/tables/time-series/demo/popest/2020s-national-total.html
• ^[3] KMTV 3, ‘Nebraska banks ensure customer confidence amid national bank closures’ https://www.3newsnow.com/news/local-news/nebraska-banks-ensure-customer-confidence-amid-national-bank-closures
• ^[4] United States Census Bureau, ‘State Population Totals and Components of Change: 2020-2022’ https://www.census.gov/data/tables/time-series/demo/popest/2020s-state-total.html
• ^[5] Forrester, ‘Predictions 2024: Banks Face A Boring, Yet Dangerous, Year Ahead’ https://www.forrester.com/blogs/predictions-2024-banking/
• ^[6] BAI, ‘Transforming the branch experience’ https://www.bai.org/banking-strategies/transforming-the-branch-experience/
• ^[7] Intel, ‘Why Smart ATMs Could Be the Future of Banking’ https://www.intel.com/content/www/us/en/financial-services-it/cloud/smart-atms.html
• ^[8] PwC, ‘Retail Banking 2025 and Beyond’ https://www.pwc.com/gx/en/industries/financial-services/publications/financial-services-in-2025/retail-banking-2025.html
• ^[9] Board of Governors of the Federal Reserve System, ‘Central Bank Digital Currency (CBDC)’ https://www.federalreserve.gov/central-bank-digital-currency.htm