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If you are old enough to remember the days when banking involved driving to a physical location, dealing face-to-face with a bank teller, and keeping track of your accounts in a “passbook,” the demise of physical bank locations may not be your first choice. The real news is that the choice is being eliminated, bank by bank. Brick-and-mortar bank locations are, by some accounts, a dying breed in the financial world.

Financial services industries are going digital at a pace even more rapid than some experts predicted. As usual, the numbers tell the story: A 2019 study found that 70 percent of banking customers prefer a digital experience rather than a trip to a bank’s branch location. From 2016 to 2017, more than 1700 bank branches closed their doors permanently. About two-thirds of online/mobile banking customers are aged 18 to 42, which does not bode well for the future of brick-and-mortar banks.

So, whither physical banks? Not so fast. If brick-and-mortar bank locations are on the way out, why then did JPMorgan Chase open a 12,000-square-foot bank location in mid-town Manhattan just last year? And why are both Chase and Bank of America announcing plans to open more than 400 branch locations in the next five years?

The answer maybe generational. The oldest Millenials are turning 40 pretty soon, and a number of surveys and studies indicate they prefer to bank using smartphones. However, Baby Boomers, who are age 55 to 74, more often than not report they prefer to know there are still physical branches in case they want to do their banking face-to-face with a bank employee. Since life spans are ever-increasing and Baby Boomers are enjoying longer periods of good health due to medical advances, chances are physical bank locations may decrease in number, but not disappear completely.

If you like good, old-fashioned savings accounts, the problem with brick-and-mortar banks is that they pay almost nothing in interest. Can you really justify maintaining an account that pays 0.1 percent interest, when a digital account may pay up to 2.25 percent with no minimum deposit? Still, the human connection offered in a bank setting outweighs the disadvantages for some customers.

Banking institutions jumped on the digital bandwagon early, largely due to the cost savings associated with eliminating construction, property taxes and labor costs. In a world where we pump our own gas, check ourselves out at grocery stores and learn to fend for ourselves more and more, banks clearly recognized the advantages of digital. Still, for now it seems that a hybrid approach may be necessary, with banking institutions offering both digital and face-to-face services. Widespread concerns about privacy, security and hacking may make the full transition to digital banking a slow process. A more measured approach may be more practical – one that allows all age groups to incrementally evolve to online banking as the international standard.

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