Many transactions that used to require a visit to a bank branch, such as to deposit a check or wire someone money, now can be done with a smartphone in the comfort of one's own home.
As more banking has migrated online and to mobile devices, banks closed a record 3,324 brick-and-mortar branches across the United States last year, according to the business intelligence data service S&P Global Market Intelligence. Big national banks like U.S. Bancorp and Wells Fargo & Co. closed the most.
The shrinking of banks' physical footprints nationwide included net closings of 58 branches in Indiana and 129 bank locations in Illinois.
Northwest Indiana lost 10 bank branches between June 30 of 2019 and June 30 of last year, according to Federal Deposit Insurance Corp. data. A total of 30 banks operated 247 branches in Lake, Porter, LaPorte, Jasper, Newton, Starke and Pulaski counties last year, down from 257 branches the previous year.
That's down from 37 banks operating 294 branches in Northwest Indiana in 2015 and 43 financial institutions with 316 brick-and-mortar locations in 2010, according to the FDIC. Northwest Indiana has lost 69 bank branches or more than 21.8% of the total since 2010.
In Northwest Indiana, Chase closed three branches, Fifth Third Bank three branches, BMO Harris three branches, First Financial Bank one, and KeyBanc one branch in the last year for which data is available. Chase has shuttered 10 branches in Northwest Indiana over the past six years, going from 34 branches in 2015 to 24 branches last year.
"A significant number of branches have closed in markets where there's been consolidation," said Ben Bochnowski, president and CEO of Peoples Bank and a board member for the Indiana Bankers Association. "The bigger banks tend to do more of the acquisitions, and branches end up consolidated in the markets where there have been mergers. You don't need another McDonald's if there's already a McDonald's five blocks away. The larger banks realized they don't need as many branches to serve the same number of customers."
Technology is the other driving factor.
"Especially during the pandemic, people learned to do more of their banking on their phones," Bochnowksi said. "You'll continue to see the transition to fewer branches, but branches won't disappear. They'll just have fewer teller windows and be more focused on engagement and value-added financial services, both in Northwest Indiana and Chicagoland and across the country. It's like the Apple Store where they only have four or five retail stores in Chicagoland that serve millions of customers. They're determined customers can take care of many things themselves but might need help picking out the right device, might need help learning about something they don't understand or might need another value-added service."
The coronavirus pandemic accelerated a trend that's been underway for years, as branches closed their lobbies as a safety precaution and more people stayed home, said Micah Pollak, associate professor of economics at Indiana University Northwest.
"COVID-19 has accelerated the switch to online services for many consumers, including for their banking and finance needs," he said. "Fewer people visit bank branches in-person now and many banks are reducing the number of branches they have or the staff in branches in response."
The closures continue. First Midwest Bank, which has closed nine branches since coming to the Region in 2006 by acquiring Bank Calumet and Standard Bank and Trust, plans to close 15% of its branches this year because of the shift to more online banking. It just closed locations in Schererville and on Hohman Avenue in Hammond.
While many people have taken to online banking, many consumers and communities could get left behind, Pollak said.
"The demand for in-person banking services is ultimately going to determine where bank branches are closed," he said. "In communities that rely more on in-person banking, branches are more likely to remain open. In communities that have adopted online banking more readily, branches are more likely to close or be downsized. For individuals that do not wish to use online services, this may make banking more difficult."
Some banks continue to grow their physical footprint. Merrillville-based Centier, which now operates 42 branches in Northwest Indiana, opened a new branch in Michigan City and is in the process of building a standalone branch in St. John, though it's closing in-store branches in three Strack & Van Til supermarkets.