Are bank branches disappearing too quickly?


Who still needs physical banks? When you can do everything from cash checks to getting a mortgage online these days, it’s no wonder the number of physical bank branches, even in the growing city of Houston. , decreased by 6% from 2010 to 2016, like my colleague Dylan Baddour reported last week.

Well, at least in the short term, a bank can fail.

Research has shown that, although in the Internet age, residents of low-income neighborhoods have been more likely to get a mortgage at a better interest rate when a bank branch is nearby. Even in areas where bank branches are relatively common, the disappearance of a branch may long standing bump in loans to local small businesses. People who don’t have a bank account – which are easier to get hold of when you can walk into a branch and ask questions – are more likely to use expensive services like check cashing and payday loans.

That’s why the National Community Reinvestment Coalition, a Washington-based advocacy group, released a report this month with a more negative view of the decreasing number of bank branches. Although the Community Reinvestment Act of 1977 prevents financial institutions from completely withdrawing from low-income neighborhoods, closures have disproportionately affected these areas, increasing the number of “banking deserts”. Declining northern cities like Baltimore, Chicago and Detroit have lost 15 to 25 percent of their branches.

Danyelle Jones, Business Relations Liaison for Neighborhood Recovery Community Development Corp. from Houston, experienced this contraction with his own eyes. Until recently, she was a branch manager for Capital One, but her locations have been converted to “selected service centers, which have more automated services and require significantly fewer employees.

The bank also closed 25 branches across Texas as Capital One encourages its customers to use its digital platforms to do things like cash checks and make deposits. Jones says it will eventually happen, but some clients are not quite there yet.

“I feel like the transition is going to happen, but it’s happening too fast,” Jones says. “In the community, people are not as receptive to the digitization of their banking operations as bank workers. People say all the time, ‘No, I want to come in, I want to talk to someone.'”

To ease the transition, Jones says bank employees should use each branch visit to teach customers how to use online services themselves, knowing the branch might not be there any longer to help them. The problem is, big data breaches have made many consumers reluctant to entrust their personal information to a computer.

“People are so afraid of it,” Jones says. “And I understand, things go wrong all the time.”

But human bankers aren’t infallible either, she notes. And soon, consumers may not have much choice.


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