Banks retreat from branches, ATMs

Rise in online transactions, dropping use of cash fuel trend

If it seems harder to find an open bank branch or an automated teller machine lately, it’s not just you.

Banks have closed hundreds of bank branches in Georgia in recent years, according to data from federal regulators and industry experts. Banks have pulled the plug on many ATMs as well.

The decline began during the 2007-2009 financial crisis, when many offices were closed as scores of banks failed and others struggled to cut losses.

But after the recession ended, banks kept closing offices at almost the same pace. People aren’t visiting brick-and-mortar branches or using ATMs like they used to because of the growing popularity of online banking, mobile apps and debit cards, industry players say.

“What we’re seeing is more of a long-term trend,” said William McCracken, CEO at Synergistics Research Corp., a Norcross financial market research firm. “Millennials are using branches less for day-to-day transactions.”

Since 2009, Georgia banks have closed 436 more locations than they’ve opened, according to SNL Financial, a banking data company in Charlottesville, Va. Banks now have only five more branches across the state than they had almost 14 years ago, according to SNL.

Many banks staff remaining branches with fewer employees who have to juggle more roles.

The decline in branches has continued even though Georgia’s 203 banks earned $1.3 billion in the second quarter of this year, their largest profit for the period in eight years, according to Federal Deposit Insurance Corp. data.

“The banks are performing better. The economy has gotten better,” said David Oliver, senior vice president at the Georgia Bankers Association. “People have just gotten comfortable with remote transactions.”

Working remotely

Jarvis Jarmel, 33, rarely visits his bank or writes checks. Working remotely on his laptop, the freelance graphic designer in Sandy Springs designs logos and other images for clients from Canada to California that he connects with online. He also collects his payments online, through PayPal.

He has a checking account at a bank, he added, but pays for most purchases with debit cards on his PayPal and bank accounts.

Those options are “super convenient,” he said.

Between changing customer habits and the 2007-2009 financial crisis, Georgia’s banking industry has gotten dramatically smaller by some measures over the last eight years.

The state’s banking industry earned $1.6 billion in the second quarter of 2007, not long before the Great Recession hit, but it had 354 banks and almost 63,000 employees then — 151 more banking firms and 20,000 more workers than it has now.

Banks’ street presence is likely to continue shrinking, said McCracken. Ten years from now, he predicted, Georgia may have only half as many branches as it has now.

Across its 11-state territory, Atlanta-based SunTrust Banks has shed 9,475 employees while closing 295 branches and shutting down 427 ATMs since 2006, according to its disclosures to the U.S. Securities and Exchange Commission.

Many of the closed branches were small outlets inside grocery stores, hospitals and other businesses. But many of the traditional branches have since morphed into coffee shops, restaurants, money transfer and check-cashing services, or doctors’ or dentists’ clinics.

Older customers

The state’s dwindling number of branches and ATMs could affect Baby Boomers and older customers, who are less likely to bank online. Meanwhile, many of the branches being closed are less profitable ones in poorer neighborhoods, which typically have fewer bank offices in the first place.

People who still want to do their banking business face-to-face with a teller or loan officer may find that they have to drive farther to find an open branch.

That is not making Audrey Hensley happy.

“I can’t get to the bank. I quit driving when I was 96,” said Hensley, now 101.

For more than 20 years, she and other residents and employees at Clairmont Place could take their Christmas club deposits, paychecks, and other financial dealings to a small bank branch that operated a few days a week on the first floor of the Decatur retirement and assisted living center.

Then SunTrust closed the part-time branch several years ago. The next bank to move in failed during the financial crisis. Atlanta-based Fidelity Bank, which replaced the failed bank, closed the branch in 2012.

Unable to recruit another bank, the retirement center now includes bank visits on its twice-a-week bus runs for residents to grocery stores and other businesses. Most residents are in their 80s.

But Hensley said she can’t see well enough to climb the bus steps anymore.

“I pay somebody to cash checks at the bank for me,” she said.

Disruptive technology

What’s causing much of the disruption at bank branches, as newspapers, retailers and other industries have already discovered, is that consumers rapidly change their behavior when online and mobile technology offer cheaper or more convenient options.

In-person visits to branches dropped after banks encouraged people to use direct deposit and to pay their bills and check their account balances online. Next came banking apps allowing people to use their smart phones to make mobile payments and remote deposits by taking pictures of their checks.

Meanwhile, cash has lost its throne. As people use their debit and credit cards for more transactions or to get cash at retailers, they need fewer visits to bank branches or ATMs to get cash.

According to Synergistics, the market research firm, visits to bank branches have dropped from an average of 3.2 per month in 2009 to 2.8 visits in 2013. ATM visits have dropped from 3.4 a month in 2007 to 2.2 last year. About 20 percent of online customers used a remote deposit app last year, up from 2 percent in 2010.

“We have an explosion of mobile banking,” said McCracken, at Synergistics. “People are getting relatively comfortable using their phones to make deposits.”

That doesn’t mean bank branches are going the way of buggy whips any time soon. Banks can’t close so many offices that they alienate customers, said McCracken. Even the most techno-savvy customers, he said, still want to be able to ask questions face-to-face for tasks such as taking out a loan or opening an account.

‘A tightrope’

Also, he said, even if traditional banking is more expensive per transaction than virtual banking, banks still have reason to keep some branches open. They have a much better chance of drumming up new business when customers visit branches than when they’re simply zapping deposits or payments on their mobile phones.

“It is a tightrope,” he said. “Banks are saying ‘Uh-oh, we’re saving on the cost side but we’re giving up an opportunity on the selling side.”

Allison Dukes, the head of SunTrust’s Atlanta banking operations, said SunTrust isn’t currently planning any branch closings in the metro Atlanta market.

“We have to meet consumers in the way in which they want to be engaged,” she said. For many people, that still means in-person transactions at a branch, she said.

But others, especially younger customers, prefer mobile banking, she added.

“People like to engage with us more and more through their mobile devices,” she said. “If you talked to most consumers below the age of 25, they wouldn’t know where a branch was.”