Bank branch closings are slowing down. What does that mean for fintech?

US banks have closed 1,261 branches during the first six months of 2022. If closures continue at the same pace over the rest of the year, then this rate will represent a 15% decline compared to 2021.

Why should we care?
These bank closures symbolize how banks and consumers alike are increasingly dependent on digital services, which only redouble the need for quality digital banking products and services. But the closures are also a symptom of significant regulatory pressures. Citing the Community Reinvestment Act, which enshrines low- and moderate-income communities’ right to convenient access to banks, the Biden administration has scrutinized bank closures, which has forced banks to keep branches open that they otherwise would shutter in the name of cost reduction. “If you are the last bank standing, you really can't leave,” said Ken Thomas, Founder and CEO of Community Development Fund Advisors in Miami. “The view now is, when the last bank goes, there's no way but down for that community.” But, arguably more importantly for fintechs, the reduced branch closure rate is also the result of greater regulatory pressure on bank mergers; with less M&A activity, fewer branches are being closed. This means fintechs can strategize with relatively greater confidence in a static banking landscape, without unexpected tie-ups between big banks and regional banks or other entities. And the US having fewer physical bank branches in general lets neobanks emphasize the superiority of their online services over those of established players, further leveling the playing field.