The number of transactions at bank branch locations is at an historical low, despite a 22 percent increase in the number of locations nationwide, and is dropping approximately five percent every year.
Consumers have gradually made the switch to more convenient banking options, such as online and mobile banking, as well as ATMs, ATM Marketplace reports.
In addition to a decrease in branch foot traffic, banks have also seen declining profits. Low interest rates and legislation like the 2010 Dodd-Frank Act have reduced bank profit. Once-profitable streams of revenue like overdraft fees and other charges have been capped or banned.
Sherief Meleis of the consulting firm Novantas said that approximately 15 percent of bank branches have been unable to bring a profit because of the low interest rates. Low interest rates have affected European retail banks, as well, according to ATM Marketplace.
Financial institutions may benefit from focusing on a strategy to attract more customers to the bank outside of its branch location. JPMorgan Chase is poised to increase the number of ATMs throughout the Boston area as part of an effort to address the decline in the number of physical branch visits.
Declining foot traffic and sources of revenue can affect the profitability and operating costs of a financial institution. While increasing ATM saturation is a tactic used by major banks, many ATM management firms offer options that allow smaller institutions to utilize a similar tactic at a lower cost than a branch location or in-house network, ATM Marketplace reports.