Numerous banks around the world have been closing their branches in low-income areas. In the US, this trend was followed even such giants as J.P. Morgan, Wells Fargo and Bank of America. The closure of branches has had an impact on the neighborhoods’ ecosystems, resulting into fewer choices for banking services and potentially higher costs due to decreased competition.

However, this could also lead to the popularity of digital-only banks that offer a great opportunity to continue banking with the preferred and trusted institutions after they have closed local branches. Besides, there are other advantages to digital banks, such as lower fees and free checking accounts.

Those criticizing branch closures often state that low-income areas inhabitants rely on branches more than they ever would rely on a digital services. The Federal Reserve’s Survey of Consumer Finances, though, has shown that it is the older and wealthier (usually self-employed) customers that use bank branches more than any other type of customers. Besides, best monthly fee remains the principal factor influencing the choice of a banking institution, rather than the presence of a close branch location. Digital banking tools have also increase in importance for modern consumers. No matter whether a customer belongs to a minority or has a lower income level – the Internet access and smartphone ownership is the same as that of white adults, proving the fact that everyone gives preference to convenient digital solutions. Very few individuals require banking branches as we enter 2019. With digital banks such daily operations as checking account balance, transferring money and paying bills no longer require significant effort and can be completed in just a couple of clicks. The reason bank branches still exist is the necessity to house bank employees and provide a secure place for cash storage. The key purpose of a bank branch is to foster physical interactions between bank employees and customers. However, innovative technologies allow for those interactions to happen remotely, without a need to be physically present. The main issue is the fact that banks still haven’t fully accepted and integrated these technologies. perhaps, they still haven’t entirely realized that what consumers care about is not physical visits, but the ability to get in touch whenever necessary and interact with a person that is ready to help.

For comparison purposes, we can look at the bank branches at the same way as retail stores. Business Insider has conducted a research, showing that a record amount of retail stores have closed, as consumers are giving their preference to online shopping experience. Banks are simply wasting money and human resources by the attempts to prolong the life of physical branches. This money could instead be invested into innovative technological instruments and solutions that would establish seamless interaction between customers and bank employees. Efficiency of communication processes is what matters at the end of the day.

Time will show what the future has prepared for physical bank branches, but chances are that in a couple of years we will rarely encounter them in our neighborhoods.