America’s biggest banks are closing hundreds of branches (Source Business Insider)
America’s biggest banks are closing hundreds of branches.
Bank of America, Citigroup and JPMorgan shut 389 branches since the third quarter of last year. Bank of America, which had over 6,000 branches before the financial crisis has now shrank to 4,629, according to third quarter accounts. The bank has cut 112 financial centers from last year. Paul Donofrio, CFO of Bank of America, said the closing of branches was part of a “shift to self-served digital channels, mobile, online, and ATM” in a 3Q earnings call transcript.
And the cuts aren’t just in terms of bank branches but also in headcount.
Bank of America indicated back in June that it planned to cut over 8,000 jobs from its consumer banking division. According to retail banking head and consumer banking co-head Thong Nguyen at a June conference, this is part of a broader cost-cutting and resource reallocation program to meet with consumers’ changing banking habits. Bank of America isn’t the only bank to restructure its branches. When Citigroup announced its third-quarter earnings last Friday, October 14, it revealed its branch count has shrunk 7% in North America from the third quarter of last year and is down 116 banks globally to 2,679.
Earlier this year, Citi Global Perspectives and Solutions (GPS) produced a report that found that banks are quickly approaching their “automation tipping point,” and they could soon reduce headcount by as much as 30%.
“Banks’ Uber moment will mean a disintermediation of bank branches rather than the banks themselves,” the report said.
“Specifically, it will mean the shift to mobile distribution being the main channel of interaction between customers and the bank,” the report reads.