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Branch Networks on a Downward Slope

New research from SNL Financial indicates the nation's branch total has been reduced by 390 during the third quarter of 2013.

Banks continue to close more branches than they open, as 390 locations were shuttered during the third quarter of 2013, according to new research from SNL Financial.

The states that lost the most bank branches were Indiana, Pennsylvania, and Florida which saw 25, 31 and 35 branches shuttered, respectively in Q3. The only state that has a net gain of branches in the third quarter was Nebraska, which gained one, along with the District of Columbia. For the year total, the U.S. had a net loss of 1,342 bank branches.

By metro area, Greater Indianapolis experienced the biggest reduction in branches during the third quarter, followed by the Chicago area and Greater Denver, the SNL analysis found.

Banks customers continuing to move to digital channels is one of the main drivers of the continued branch reduction, said SNL, along with the continued M&A trend in the industry as banks consolidate branches to save costs after closing deals.

However, the report noted that despite the dire statistics, branches are not headed for "immediate extinction."

"They still serve as the public face of banks and provide an important marketing function in high-traffic neighborhoods," a portion of the report states.

[See Related: Accommodating the Evolving Branch with an Adjusted Model/a>]

Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio

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User Rank: Apprentice
11/26/2013 | 10:18:33 PM
re: Branch Networks on a Downward Slope
While branches maybe closing, the small local and smaller regional financial institutions are keeping their branches open. On-line is fantastic as long as you are certain you know what products you want. But in speaking with many 30 G㢠50 year olds, they still like the branch idea because it is about a relationship. Additionally, the 50 year olds have the wealth and assets and they are looking for a real person experience. While we see so many on-line insurance companies today, our local insurance reps are seeing a rise in business. Those who go the route of on-line insurance end up coming to an agent in a couple of years because of the lack of real expert help from the on-line. Branches could be a real growth opportunity for the smaller guys wanting to offer face to face service.
Nathan Golia
Nathan Golia,
User Rank: Author
11/12/2013 | 9:37:24 PM
re: Branch Networks on a Downward Slope
In insurance, customers want to do a lot of tasks online, but research has shown that even as they are buying policies online they are looking for companies with local agents "just in case." I live farther from my bank branch than I have in years and I can tell you it does actually have me evaluating other options. Banks need to be strategic about their branches and not open and close them at will, because consumers do want that building to go to for certain tasks.
User Rank: Author
11/11/2013 | 10:11:41 PM
re: Branch Networks on a Downward Slope
Yes, it's more of a market correction. And despite the hand wringing over the "death of the branch" SNL also noted that branches play a vital role in a bank's channel strategy.
Zarna Patel
Zarna Patel,
User Rank: Apprentice
11/11/2013 | 8:35:00 PM
re: Branch Networks on a Downward Slope
Wow! I can totally see something like the Amazon Mayday tech support for Kindle being included on ATM screens and become a great substitute for branches.
User Rank: Author
11/11/2013 | 5:16:59 PM
re: Branch Networks on a Downward Slope
Branch reduction also should be analyzed in the context of the crazy branch explosion of 5-7 years ago. At one point I could count 7 or 8 branches (7 different banks) within a 2-block radius of my apartment in Hoboken, NJ, and at least 5 of those had opened relatively recently. At least 2 of those branches have since closed (one of them is now an OB/GYN practice). There definitely was branch overbuilding in the first decade of the 21st century.
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