States Where People Still Rely on Brick-and-Mortar Banking Services [2023 Data Study]

In years past, depositing a check, starting a new bank account, or taking out a loan required a visit to the local bank. But with the digital economy in full force today, many Americans have less and less need to visit a brick-and-mortar bank branch, and an increasing share of Americans are living mostly cashless.¹ Financial transactions like transferring funds between accounts, depositing checks, and even taking out a loan can be done without setting foot in a physical bank. However, for a certain segment of the population, visiting the local bank branch can be a preference or even a necessity.

The Digitalization of Banking Services

As a large share of the population shifts to online banking, banks have been closing branches and ATMs. The number of brick-and-mortar bank branches — including credit union locations — peaked in 2011 at just over 105,000 and has been steadily declining since then. In 2021, there were fewer than 94,000 brick-and-mortar bank branches nationally. Fewer branches can mean longer wait times for those who rely on the bank locations that remain open. For some, this can mean having to spend additional time away from their daily obligations such as work or childcare.

The Impact of Digitizing Banking Services

The shift to the digital economy and the rise of online banking has made it easier and more convenient for many Americans to do their banking. However, many do not have the necessary infrastructure to access online banking reliably. While the majority of households own devices to access the internet, 10% of households don’t have a smartphone, nearly 20% don’t own a desktop or laptop, and more than one-third don’t own a tablet. An even larger share of households do not have internet subscriptions — 16% do not have cellular data plans, almost one-quarter don’t have broadband internet, and nearly 10% have no internet subscription at all.

These disparities in reliable access to online banking are even more pronounced after accounting for education and income. According to the U.S. Census Bureau, less educated households are much less likely to own a computer than households with a college degree — nearly 11% of households without a high school degree do not own a computer, compared to just 1% of those with a bachelor’s degree or higher. And lower-income households are much less likely to have an internet subscription. More than 26% of households with less than $20,000 in annual income do not have an internet subscription, compared to less than 4% of households who have an annual income of $75,000 or more.

Brick-and-Mortar Banking by Demographic and Location

Although online banking has provided a new level of convenience for banking customers, many of the most vulnerable populations still rely on brick-and-mortar locations for their banking needs. In particular, lower-income households (those with less than $15,000 in annual income), households without a high school degree, and older households are much more likely to rely on brick-and-mortar banks. These households will suffer the most due to the decline in brick-and-mortar bank branches.

Reliance on brick-and-mortar banking also varies by location. States like Oregon, Arizona, and Florida — whose populations include large concentrations of people over 65 — are among the states with the most households that use brick-and-mortar banks. Other states that have low rates of computer and internet access, such as North Dakota and Iowa, are also among the states most reliant on traditional banking. Alternatively, Georgia (76.4%), Alaska (76.4%), and Louisiana (76.7%) have the lowest share of households that use brick-and-mortar banks.

For a breakdown of all 50 U.S. states, here is the report’s complete data table:

Methodology

To determine the states where people still rely on brick-and-mortar banking services, researchers at Upgraded Points analyzed the latest data from the Federal Deposit Insurance Corporation’s 2021 National Survey of Unbanked and Underbanked Households, the National Credit Union Administration’s December 2021 Call Report Quarterly Data, and the U.S. Census Bureau’s 2021 American Community Survey. The researchers ranked states according to the share of households that use brick-and-mortar banks, among banked households that accessed their account(s) at least once in the year prior to the survey. In the event of a tie, the state with the larger share of households that only use brick-and-mortar banks was ranked higher. Researchers also calculated the share of households with a bank account and the total population per bank branch. Brick-and-mortar banks include both banks and credit unions.

Final Thoughts

While the rise of the digital economy and online banking has been a boon to many households, those Americans who still rely on brick-and-mortar banks are being left in the digital dust. Brick-and-mortar bank branches are on the decline, and those who prefer to visit their local bank in person either by need or necessity are hurting as a result.

The number of brick-and-mortar bank branches has been steadily falling for more than 10 years. Fewer bank branches can mean longer travel times to get to the bank and longer wait times once there. Rural households and those that rely on public transportation can be particularly impacted.

Some households do not have the means to access online banking. Nearly 20% of households do not own a computer, and 10% do not have a smartphone; additionally, a significant share of households do not have a cellular data plan (16%) or broadband internet (24%). These households are more likely to be reliant on brick-and-mortar bank branches for their banking needs.

Over 95% of American households have a bank account, and few rely solely on brick-and-mortar banks — nationally, about 10% of households report only using brick-and-mortar banks. However, the households that only use brick-and-mortar banks tend to belong to vulnerable population segments; a disproportionate number are lower income, less educated, and over age 65.

As online banking becomes more prevalent, traditional brick-and-mortar bank branches will continue to decline. While many households welcome the added convenience that online banking offers, those households that rely on visiting banks in person will be adversely impacted.

References

1. Pew Research Center. (2022, October 5). More Americans are joining the ‘cashless’ economy. https://www.pewresearch.org/short-reads/2022/10/05/more-americans-are-joining-the-cashless-economy/. Retrieved August 8, 2023.