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Many U.S. retail banks are permanently closing branches and firing staff, betting that online banking that became a habit during the 2020 shutdown will endure, according to the Financial Times.
Citigroup, JPMorgan, and Wells Fargo collectively have closed more than 250 branches this year, cutting their networks by as much as 5 percent.
Wells Fargo, which had the most domestic branches at the end of 2020, closed 154, about 3 percent of its outlets, and terminated 6 percent of its workforce.
“Our customers are increasingly leveraging our digital capabilities,” enabling the bank to “adjust branch staffing,” CFO Michael Santomassimo said in comments quoted by the FT.
Citigroup dumped about 100 branches across Asia, Mexico, and the U.S., about 4 percent of its network; JPMorgan shuttered 40 offices, about 1 percent of its total.
Physical visits to branches have been declining in recent years, but the banks still see brick-and-mortar locations as essential to draw new clients.
“The difference is that, with digital, we can enter a new market with fewer branches than we did five or ten years ago and serve just as many clients, if not more,” JPMorgan said in a statement quoted by the FT.
Online banking has long been predicted to shrink the number of in-person bank locations, but 2020’s lockdown sped the process, the FT noted.
TREND FORECAST: We predicted this trend almost two years ago (“Don’t Bank on Banking Jobs,” Trends Journal, 8 October 2019) and see it growing stronger. Eventually, people will need to enter bank buildings only to confer over loans or account problems or to provide a witnessed signature.
And, with the commercial real estate sector already suffering from the work at home trend, fear of employees returning to work and businesses forcing workers to get vaccinated, the loss of bank branches which are richly spread throughout cities is another trend that will negatively affect commercial real estate.