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February 17th 2021

Where Have All the Banks Gone? Branch Closures in the U.S.

Branch closures in the US have been increasing over the last few years as consumers perform more of their banking services online. As bank branches close, merchants must maintain control over their banking costs, ensuring their cash processing arrangements are cost-effective and flexible as their banking relationships and cash volumes continue to evolve.


In a recent Q3 2020 earnings call, Andrew Cecere, President and CEO of US Bank, the fifth largest bank in the US by number of branches, explained how digital sales now account for more than half of total loan sales in the US. “Business investments are supporting customers’ evolving behavior” he explained. The accessibility of digital has proven to be a key driver of ongoing growth, he continued.

Consumer uptake of digital bank services has increased in the last decade, and banks have recognized the opportunity to shift away from physical branch banking.

While many point to the COVID-19 crisis as a catalyst to these closures, the trend towards digital service provision has been expected by many banks for several years. As indicated in Figures 1 and 2, US Bank’s transactions have been predominantly digital for the last three years. As likely as these trends were expected, however, they are likely to lead to increased bank closures across the country.

Figure 1: Transactions (% of Total) – Three Months End

Figure 2: Loan Sales (% of Total) – Three Months End

In 2018, Wells Fargo announced plans to close to 900 branches from 2018 to 2022 and in July 2020, closed 65 branches across the US. Following 300 branch closures in 2019, US Bank announced in 2020 it will close an additional 400 branches by Q1 2021. As shown in Figure 3, in year end June 30 2020, a net total of 1,463 bank branches closed across all banks in the US, netting closures against openings.

As bank branches continue to close, it is important for merchants to address their banking solutions and identify the effects these closures may have on their bottom-line.

Cash Concerns

For merchants walking their cash deposits to the bank, a local bank closure could precipitate the need to question current cash arrangements and the alternative methods for cash collection and processing. A typical solution is turning to Armored Transport (AT) providers for cash collection and processing. For merchants previously reliant on employees to transport cash to the bank, partnering with an AT provider may increase initial costs. These initial costs, however, could be offset against lower bank costs, employee resources saved and the benefits of improved security. As estimated by CMSPI, branch banking can be three times the cost of banking through an AT provider. While the circumstances for each merchant differ, it is worthwhile for merchants to explore the different levers and pulls at play when balancing AT and banking costs.

Banking Relationships

For a national merchant, as several branches may close in a region wherein the merchant is walking cash to the bank, they may find a cost saving opportunity in reviewing their entire banking relationship rather than just reviewing their arrangement with the banking partner in that region. While possible to switch banks on a targeted basis in response to local bank closures, the merchant may find more opportunity in reviewing their entire banking relationship nationally. For a thorough consideration, a merchant should take into account the following areas of their banking relationship:

  • ATM maintenance and refilling
  • Management of chargebacks
  • Interchange fee discounts
  • On-us transactions and reduced network fees
  • Changing costs of cash deposits

Figure 3: Bank Branch Openings and Closings, 2010-2020

Review Cash Payments

These trends should prompt merchants, regardless of their cash collecting and processing arrangements, to ensure their cash payments are cost-efficient and future-proof. Contracts with AT providers should be reviewed to secure the merchant the best solution for their current situation. Newer solutions on the market, including non—armored cash collections and developments in Cash Office Technology (COT) are just some of the tools available to merchants now.

These tools, if implemented in the right context, can positively impact a merchant’s bottom-line. COT, for example, is typically a costly solution, but could be worthwhile for a merchant with high cash volumes and remote locations. Alternatively, non-armored solutions benefit merchants by providing them with flexibility, arranging collections as and when needed based on their current cash takings. As merchants look to future-proof cash arrangements, it’s important to weigh all factors on a store-by-store basis to determine the optimal, cost-saving solution. The analysis, however, can be complex and relies heavily on accurate data.

CMSPI Cash Solutions

As the footprint of US national banks continue to evolve, it is important for merchants to maintain control over their banking relationship, ensuring their solutions are as future-proof and cost-effective as possible. CMSPI’s Armored Transport Scheduling software, for example, is a key tool in helping save merchants reduce costs on cash processing. Examining the locations, scheduling, and risk profiles of each merchant, CMSPI’s proprietary armored car optimization software can assess the suitability of armored car providers by each merchant location; produce optimized schedules, ensuring efficiency and cost-savings; and assist in calculating risk ratings for each AT solution.

In addition, cash recycling optimization and cash processing audits are just some of the services CMSPI has provided to merchants, helping to generate large savings. Please feel free to reach out if you would like to get in touch to learn more about our cost saving cash services.

Note: Figures reflect totals adjusted to county only traditional and supermarket branches.