In an exclusive report, The Wall Street Journal writes that Bank of America (BAC) will close 10 percent of its branches. The paper says that "The driving force for the closings is changing customer preferences." More people do their banking online and on mobile devices. The financial firm has 6,100 branches.
The closings are bad for the bank's employees but good for Bank of America's long-term earnings. That is not merely because of the savings it will get by shutting 600 branches; it is because new trends in consumer financial habits will probably lead to many more branch shutterings in the future.
The entire banking industry may emerge from the recession in better shape than it has been in a long time. Part of this is due to the deleveraging of their balance sheets and more careful consumer borrowing habits. Banks still face several quarters of wrenching credit card defaults.
Broadband and 3G mobile devices are allowing more and more people to conduct e-commerce transactions over the Internet. The trend will continue and may actually accelerate as an increasing portion of the population gets comfortable about online security and becomes more willing to handle financial transactions online.
Banks are going to save a great deal more money in the future by closing retail outlets. The "bank on every corner" period is drawing to an end.
Douglas A. McIntyre is an editor at 24/7 Wall St.