US Bank Branch Closures Slow from Pandemic-Era Record Highs

Coming off of two consecutive record years, U.S. bank branch closures have now slowed considerably.

After the COVID-19 pandemic greatly accelerated digital banking, U.S. banks began shuttering branches at a rapid pace, leading to a record number of closures in both 2020 and 2021. While branch closings still outpace openings, the pace of closures has slowed in the past two quarters.

In 2021, U.S. banks closed more than 800 branches each quarter for a total of 4,056 closures that year, but 2022 is set to fall short of that record, with just 2,514 closures through Sept. 20. Further, in the second quarter, U.S. banks closed just 574 branches, the lowest quarterly total since the first quarter of 2020 when banks closed 522 branches.

Even as technology takes a larger role in banking, branches are still vital, industry experts said.

"The branch remains the center of the banking universe," Dave Martin, a retail banking strategist and the founder of BankMechanics, said in an interview with S&P Global Market Intelligence. "Customers still base their banking decisions like where to bank by access to a bank branch."

Branches are also still a necessity for more complex transactions that involve in-person signings or larger monetary amounts, said Paul Davis, director of market intelligence at Strategic Resource Management.

Further, branch closures are likely plateauing after the high rate of closures during the pandemic, he said.

"A lot of people went to digital channels and remote channels to kind of right size," Davis said. "Maybe everybody feels like they've right-sized it, and they're just waiting to see what the next set of metrics or the next kind of adoption rates are."

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