The traditional bank branch is not at risk of going extinct, but there are fewer and fewer of them, and the number of branches in D.C. that closed last year was among the highest in the nation.
The D.C. market saw 57 bank branches close in 2019, behind only New York and Chicago, according to MagnifyMoney.
There are several reasons why banks are closing branches. The obvious one is the increase in the use of online banking services — two-thirds of Americans use digital banking channels, according to a 2017 American Bankers Association report.
Banks also reduce overhead by not holding onto expensive real estate leases.
Another big reason for increasing branch closings is an increase in bank mergers, which the FDIC says are at a 17-year high. The recent closing of the SunTrust merger with BB&T, creating the newly named Truist Bank, makes it the second-largest bank by deposits in the D.C. market, and will likely lead to some branch closings.
Branches are still favored by some banking customers.
MagnifyMoney said older customers, as per the stereotype, tend to favor in-bank transactions. But so do customers who make a lot of deposits, such as small businesses, and those who deal a lot in cash.
There are advantages to holding on to that concept of a personal banking relationship, too.
“If you have a relationship with your local branch, they may be able to offer you a better rate on a loan or a better yield on an investment,” MagifyMoney’s Chris Horymski told WTOP.
Some banks are trying to make their branches hip, like coffee shops, to stay relevant.
“There is a lot of boutique-ing of bank branches that is happening. I think a lot of it is still experimental, so the idea of bank-as-a-lounge is not ready yet,” Horymski said. “But experimentation is certainly in the air in the banking industry.”
The top 100 metro areas have lost about 1,300 bank branches since 2018.
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