No End in Sight for US banks' Record-Breaking Branch Closure Spree

U.S. banks are looking to do more with less by rapidly consolidating their branch footprints and reinvesting resources into digital channels.

Since the onset of the COVID-19 pandemic, a number of U.S. banks have drastically reduced their branch footprints. Among U.S. banks that had at least 10 net branch closures since Jan. 1, 2020, 14 have closed at least 20% of their footprints and an additional 10 have closed at least 15%.

The pandemic has bolstered digital banking usage, allowing banks to accelerate branch closures and shift resources toward technology and digital. The industry has closed more than 2,700 branches so far in 2021, surpassing the record number of net closures in 2020, and industry experts do not expect banks to slow down anytime soon.

"There are a lot of branches that have been underutilized for years. ... 2022, in my opinion, is the year, that's going to actually push the tide further to say, 'Let's go ahead and close some of those branches,'" said Christopher Marinac, director of research at Janney Montgomery Scott, in an interview. "There was some piecemeal activity in 2019 and 2020. And obviously, everything changed with the pandemic, but as we now know so much more, I think the attitude is 'We can definitely do with less branches. We can do with less space.'"

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