Online Banking Operations Mean More Bank Closures

December 20, 2016         By: Steven Anderson

It wasn’t so long ago when we heard about Comerica Bank planning to close and consolidate 38 of its bank branches; it was just late October, actually. Though with the way the weather’s been, it may seem like late October was light years away, that was barely two months ago.

Now, reports from the BBC suggest that Comerica’s hardly alone, and several banks throughout the UK are joining the closure train.

It’s not just one bank, either; several banks have closed branches in the UK over the last two years. HSBC closed better than one in four branches overall at 27 percent, and even Lloyds closed 14 percent of its branches. The percentage king of closures, meanwhile, was Co-operative Bank, which closed just over every other branch at 53 percent.

The biggest reason behind the closures, as stated by the banks, is the rise of mobile banking, including online banking in general. With more mobile and online banking users, there are fewer users going into branches, and that means less need for branches. That also means closed and consolidated branches, like Comerica did previously.

However, this trend may be coming to an end as certain elements rebel; 56 percent of adults used mobile banking last year, which means 44 percent did not. Reports suggest there are as many as 20 million adults in the region who either don’t or outright can’t use online banking, specifically, those without the proper broadband connection, or those without the technical expertise like the elderly or the learning disabled.

While a robust mobile banking presence is certainly a smart idea based on how many users there are and how much more often mobile banking is being used, it’s also important to maintain a proper branch experience. Too many users out there aren’t turning to mobile and online alternatives, so instead of just ignoring them, banks will have to maintain that physical presence for some time to come.

It’s an important point to keep in mind; while online is a great alternative for many of us and many of the things we do, it can’t be a universal replacement. We’ll always need that physical presence, but if the physical presence isn’t profitable, it may go away whether we need it or not.