In 2023, America saw a wave of bank branch closures with Wells Fargo leading the pack. The increasing trend towards digitization of banking services likely influenced the surge in shuttered storefronts.
In 2023, the U.S. banking sector observed over 1,500 branches clocking out of the business. A noteworthy percentage of these closings had a profound impact on the states of California and the Midwest region. In contrast to the stream of closures, a meager few hundred branches graced the nation with their opening during the same year. Interestingly, banks recorded closure filings in 49 out of the 50 U.S. states with West Virginia being the only exception to the trend.
California and Other Hard-Hit States
The Golden State, California, emerged as the state with the highest tally of closures with 319 filings. Los Angeles bore the brunt of these closures. Following California, the states of New York, Texas, New Jersey, and Ohio also recorded considerable numbers of closures with 117, 107, 78, and 71 filings respectively.
The Case of Wells Fargo and other Banks
Wells Fargo surfaced as the major contributor to the string of closures, putting an end to over 300 of its branches. An oddity in this wave of closures was the complete shutdown of Silicon Valley Bank along with a few more. Also worth noting is that not all filed closures have been finalized with several hundred branches still in limbo.
Standard procedure dictates that banks notify customers prior to a closure while suggesting the nearest operational branch. Regrettably, there have been reports of instances where clients found their bank accounts terminated with minimal notice or explanation.
Some States Witnessed Growth
Despite the overwhelming trend of bank closures, certain areas, primarily in the South, recorded a net gain in terms of bank locations.
The Economic Picture
Contrary to what one might expect, the U.S. economy dodged a recession in 2023, despite these widespread bank closures.
Digitization: A Possible Explanation
The surge in online banking usage coinciding with a rising number of closures suggests a probable link. The convenience and ubiquity of digital banking services could be steering the banking sector away from traditional brick and mortar establishments.