Full-Service Branch Access Unaffected Despite Industry Consolidation

Customers continue to value in-person interaction from their banks, despite the increased use of online banking services, Federal Bank of Cleveland research has found.

According to the study, which questioned wither the consolidation within the banking industry has changed the access customers have to a full-service bank branch, found that the total number of full-service bank branches declined to 77,000 in 2020.

Twenty years of consolidation in the industry has meant that the nearest full-service branch for urban customers is roughly 1.5 miles, although this has improved from 4.6 miles to 4.3 miles for rural customers.

As part of the study, and to better understand the impact of consolidation, two metrics were used to analyze changes in consumer access - the number of bank branches per 10,000 people, and the average distance to the nearest branch.

Used along with measures of branch accessibility in both urban and rural areas, this gave a sense of how readily consumers can physically access a branch location and how this feeds through on the ground as population is not uniformly distributed across the country and raw numbers of bank branches do not tell the whole story.

The report stated: “Annual net increases in branches experienced during the 2000s turned into net losses as branch openings decreased significantly and closings picked up modestly during the 2010s. Despite these developments, this analysis indicates that, on average, urban consumers have not experienced a significant change in their ability to access a full-service bank branch, and rural consumers saw full-service branches become more accessible.

“Overall, this analysis suggests that even though consolidation may create fewer choices of banking institutions, it provides consumers access to larger networks of branches and has caused no significant change in a customer’s physical proximity to branches on average.”