Don’t Confuse Branch Closures with Fewer Banking Services

By Hugo Dante
ABA Economic Research Associate

Policymakers have recently voiced concerns over bank branch closures and the effect they could have on low-income at-risk communities. Banks serve a critical role providing the financial lifeblood for their communities. While banks have begun to shift branch strategies to face technological, economic and demographic changes, they continue to take this responsibility seriously. Despite concerns focused on low-income communities, the vast majority of branch closures have occurred in upper- and middle-income neighborhoods and urban areas. In fact, many banks, particularly community banks, are opening more branches on net than they are closing.

From 2013 to 2018 (the earliest available Community Reinvestment Act designations for census tracts on S&P SNL) 16,371 bank branches were closed. Several factors have contributed to this trend—primarily changes in demographics and consumer preferences. Most notably, Americans are leaving rural areas for booming metro areas and their suburbs.

Moreover, technological advancements have changed the way consumers interact with banks. A recent survey found that 7 in 10 Americans use a mobile device to manage their bank account at least once per month, and 46 percent do so more than three times a month. Adoption is particularly strong among the tech savvy millennial generation. As millennials overtake baby boomers as the largest generation, particularly in urban areas, banks must adapt to higher demands for flexible, instant and increasingly internet and mobile based financial services.

The vast majority (76 percent) of bank branch closings have occurred in middle- and upper-income census tracts. Furthermore, nearly 94 percent of closures have taken place in urban or suburban census tracts. Low income branch closings represent only 5 percent of all bank branch closings. Of those closures that do take place in low-income areas, 99.5 percent have occurred in urban or suburban areas.

Few branch closures take place in rural areas, with rural closings representing only 6 percent of all closings and mostly in middle- and upper-income tracts. In fact, between 2013 and 2018, only five bank branches closed in rural low-income census tracts. Banks take very seriously their responsibility to serve low-income communities and do so well today. In fact, 99 percent of all low-income census tracts are within driving or commuting distance (defined as 10 miles for rural or suburban tracts and two miles for urban tracts) of a bank branch.

Branch closures should not be confused with fewer banking services. As consumer preferences change, banks must adapt, including providing convenient access to expanded services through digital channels. While banks today are rethinking how best to deliver services to their customers, the service offerings do not change and in fact have expanded to serve customers more conveniently.


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