A new study by Bain — the financial consulting firm — says bank branches are abandoning rural America. The study says it is likely putting inexpensive and convenient banking and financial services out of reach.
Online banking appears to be the reason for the shift. Younger people, and those that are more understanding of how to navigate the web are using online services more. So banks are responding by reducing staff and branches.
As part of its proof the study quotes statistics from the Federal Reserve that says over half of the counties in the U.S. lost bank branches between 2012 and 2017. Several counties in the PIA Western Alliance states of Idaho, Nevada, Arizona and New Mexico are among those that Bain says are distressed because of closing bank branches.
Counties most impacted in the PIA Western Alliance states:
• Idaho — Butte County
• Nevada — Storey County, Mineral County, Lincoln County
• New Mexico — Mora County
• Arizona — Greenlee county
Bain says urban areas are also being impacted by online banking, and both urban and rural counties have lost branches at the same rate. It’s a 7% drop. But the impact — Bain points out — is much bigger in rural areas than urban.
Of the half of the impacted counties in the country, 40 of them are “deeply affected.” The Fed defined that in 2012 as being 10 or fewer bank banks in a county. Today those 10 or fewer banks have been cut in half.
There are also 100 banking markets — most of them rural — that went from having at least one bank headquarters to having none. Industry consolidation is the reason.
The communities impacted tend to be poor with lower median incomes and high poverty rates. People living in those counties also have less education and lack transportation options.
The study makes an obvious point. Not having access to a physical bank branch makes managing money much more difficult. Sometimes we need face-to-face, person-to-person contact to resolve banking problems or to do a complicated transaction.
Plus, while online banking is growing, and is important, most of us still conduct our main banking business at a physical location. A good example is taking out a loan. Another is resolving a dispute. People are much more satisfied in these cases when there is physical contact.
Talking to someone on a video screen or in a computer chat box is not all that acceptable in these — and most — cases.
A high percentage of those in rural communities that have lost banks have switched to online banking. However, some find expensive and not all that reliable web service to be difficult to use.
Older customers with zero digital knowledge and experience are being totally left out.
Source link: MSN Money