Making a quick stop at a bank for a deposit might soon be a thing of the past, as per a new analysis.

A recent report by Self Financial, a credit and finance firm, utilized information from the Federal Deposit Insurance Corporation (FDIC) to analyze consumer banking behaviors. The study drew on historical data from as far back as 1934 and included surveys from over 1,000 Americans, revealing a distinct trend: in-person banking is declining.

The research highlights that the number of bank branches has been decreasing steadily for over a decade. Since 2012, the physical presence of banks has shrunk due to various reasons such as the aftermath of the 2008 financial crisis, increased reliance on online banking, and changes in consumer habits during the 2020 pandemic. This has prompted researchers to speculate about the potential future landscape of banking.

In fact, the authors of the study suggested that if current trends persist, we might eventually see the complete disappearance of bank branches.

Ongoing Bank Branch Closures

Since 2018, an average of 1,646 branches have closed annually in the United States, leading to a total of 69,590 branches in 2022—a drop from 82,461 branches in 2012. This reduction means fewer available options for traditional services like mortgages.

To give some context, in 2022, there was one bank branch for every 4,715 residents—the highest ratio of people to branches since 1995. This led the report to predict that by 2041, physical branches could vanish if trends continue as they are.

Across the country, some states naturally have fewer banks. For instance, Hawaii had the lowest ratio of branches to population, with only one branch per 9,797 people. Meanwhile, states like Iowa and Kansas had fewer than 3,000 people for each branch.

States Seeing the Most Branch Closures

Certain states have experienced more branch closures than others, with California, Illinois, and Florida at the forefront.

Between 2012 and 2022:

• California led with 1,080 branch closures.
• Florida followed with 1,056 closures.
• Illinois had 823 closures, coming in third.

While those may be the states most affected, a total of 45 states reported ongoing branch closures from 2002 to 2022.

A few states managed to break the trend. Nebraska gained 20 new branches, Vermont added 17, Montana saw 16, South Dakota gained 7, and North Dakota maintained its count, losing none.

Using a polynomial regression model for data analysis, researchers projected that if trends hold, New England could see the swiftest move to branchless banking, with Connecticut, Maine, and Vermont potentially being without branches as early as 2031.

According to these projections, Wyoming and Pennsylvania may be among the last states holding on to in-person banking services into the 2080s. However, these predictions are based on specific circumstances that may not take all variables into account, making complete branchlessness unlikely.

Reasons Behind the Shift from In-Person Banking

The significant reasons for the decline in physical bank locations include the effects of the COVID-19 pandemic and the rise of online banking.

A 2023 survey of 1,046 Americans related to the study indicated that 69.9% believe the banking system requires reform. Interestingly, 38.4%—over a third of respondents—still visit a physical branch at least once a month, despite the increasing appeal of online banking.

The study identified specific reasons why people still prefer going into branches. When asked about their visits, responses included:

• 63.2% go to branches for cash deposits
• 56.5% visit to consult with an advisor
• 53.6% go in to make cash withdrawals.

This indicates a 29.4% decline in the number of people using branches primarily for cash transactions, which researchers attribute to a growing cashless culture spurred by the pandemic and card-only business policies.

Some individuals choose between online and in-person banking based on their trust levels. The findings of the study revealed that:

• 39% trust physical branches more
• A similar 36.1% prefer online banking for safety
• 24.9% feel most secure using app-based banking.

Individuals who favor traditional banking often mention benefits such as heightened security, availability of personal advisors, convenient and complimentary access to cash, as well as a straightforward system for making deposits and withdrawals. Concerns regarding online banking reflected these sentiments, as many participants expressed worries about security, limited free ATM options, the absence of real-person support, and feeling overwhelmed or confused by online banking procedures.

Nonetheless, a significant 73.2% of the respondents indicated their belief that online banking will surpass traditional bank branches within the next two decades.