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Why Branch Banking is Dying in America

Published

2 years ago

February 9, 2021

Aran Ali

the end of branch banking

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The Briefing

In the last decade, 27,943 bank branches have closed in the U.S.
The increasing prominence of mobile and digital banking is leading to lighter demand for in-person banking services

Branch Banking Is Dying

The 2008-09 financial crisis was triggered by reckless banking practices that dominoed into the global economic system.

Though the world has since recovered and moved on from the crash, the banking system that ignited such damage has in some ways never been the same.

Take U.S. branch bank net openings, which is undergoing a notable trend reversal. According to the Federal Deposit Insurance Corporation (FDIC), for 11 years and counting, the number of U.S. bank branch closings has exceeded the number of branch openings.

Year	Openings	Closings	Net
2020	1,251	2,788	-1,537
2019	1,460	3,090	-1,630
2018	1,563	3,134	-1,571
2017	1,065	2,986	-1,921
2016	1,084	2,826	-1,742
2015	1,209	2,689	-1,480
2014	1,351	2,996	-1,645
2013	1,470	2,500	-1,030
2012	1,623	2,570	-947
2011	1,901	2,364	-463
2010	1,897	2,892	-995
2009	3,457	2,877	+580
2008	3,562	2,300	+1,262
2007	5,168	2,024	+3,144
2006	3,759	1,609	+2,150
2005	3,947	2,026	+1,921
2004	4,095	2,217	+1,878
2003	3,404	2,271	+1,133
2002	2,556	2,469	+87
2001	3,193	2,982	+211
2000	3,274	3,826	-552

There are fewer banks in America with every passing year—in 2020 alone, a deficit of 1,537 branches was recorded, almost 2% of the roughly 85,000 branches in the country.

Branching Towards Digital

Unsurprisingly, the fall in branch banking coincides with the adoption of digital activity in the banking space. And this is especially true for younger, tech-savvy generations.

Undoubtedly, convenience is a big factor, as now nearly 50% of traditional branch banking activity can be conducted online. As a result, mobile banking activity occurs most frequently on one’s couch or bed.

The Good Ol’ Days

The decline in the number of branch banks also reflects the overall downturn of the broader banking industry. In that, the industry faces a slew of challenges including:

1. Contracting net interest margins
Net interest margins are the difference between the interest income generated for financial institutions and the amount they pay to lenders.

2. Fintech industry disruption
Fintech is bridging the gap between finance and digitization, sleek modern technologies enable firms to optimize financial services and the customer experience.

3. More stringent reserve ratio regulations
Reserve ratios are a portion of reserves that a financial institution must hold onto rather than invest or lend.

Investors are fleeing to other avenues as is evident in the stock price performance of the big U.S. banks. As a result, underperformance has been a common theme in the last decade.

	Number of U.S. Branches	Stock Price Performance (Jan 2011 - Jan 2021)	Change Relative to S&P 500
JPMorgan Chase	5,016	208%	+17%
S&P 500		191%
Bank of America	4,265	116%	-75%
U.S. Bancorp	3,067	76%	-115%
Citigroup	704	25%	-160%
Wells Fargo	5,195	-2%	-193%

What Lies Ahead

Yet, despite the progress towards digital banking, the U.S. is still a laggard. For instance, large cohorts of Americans still use cash as a frequent transaction method, while the country’s mobile payment penetration rates are lower than most developed nations.

As a percentage of smartphone users, 29% of Americans have adopted mobile payments. A tepid figure relative to Denmark at 41%, and India at 37%.

America’s fierce economic rival, China, has a whopping 81% of smartphone users that have adopted mobile payments. That’s 801 million people, compared to America’s 69 million. Adjusting for population disparities, China still has 2.7x more mobile payment users.

If the U.S. follows on the path of other more fintech savvy countries, visiting a bank branch and using physical cash may become as increasingly antiquated as writing a check is today.

Where does this data come from?

Source: Federal Deposit Insurance Corporation
Notes: This data was updated last on January 8, 2021

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Datastream

Visualizing the Five Drivers of Forest Loss

Approximately 15 billion trees are cut down annually across the world. Here’s a look at the five major drivers of forest loss. (Sponsored)

Published

7 days ago

November 21, 2022

Govind Bhutada

The Briefing

On average, the world loses more than 20 million hectares of forests annually.
Agriculture and commodity-driven deforestation each account for approximately a quarter of annual forest loss.

Visualizing the Five Drivers of Forest Loss

The world has lost one-third of its forests since the ice age, and today, approximately 15 billion trees are cut down annually.

Forests are wellsprings of biodiversity and an essential buffer against climate change, absorbing billions of tonnes of carbon dioxide emissions every year. Yet, forest loss continues to grow.

The above infographic sponsored by Carbon Streaming Corporation highlights the five primary drivers behind forest loss.

Deforestation vs. Degradation

‘Forest loss’ is a broad term that captures the impacts of both permanent deforestation and forest degradation. There is an important distinction between the two:

Permanent deforestation: Refers to the complete removal of trees or conversion of forests to another land use (like buildings), where forests cannot regrow.
Forest degradation: Refers to a reduction in the density of trees in the area without a change in land use. Forests are expected to regrow.

Forest degradation accounts for over 70% or 15 million hectares of annual forest loss. The other 30% of lost forests are permanently deforested.

Driving factor	Category	Average annual forest loss (2001-2015, million hectares)
Commodity-driven deforestation	Permanent deforestation	5.7
Urbanization	Permanent deforestation	0.1
Forestry products	Forest degradation	5.4
Shifting agriculture	Forest degradation	5
Wildfires	Forest degradation	4.8
Total	N/A	21

Commodity-driven deforestation, which includes removal of forests for farming and mining, is the largest driver of forest loss. Agriculture alone accounts for three-fourths of all commodity-driven deforestation, where forests are often converted into land for cattle ranches and plantations.

The harvesting of forestry products like timber, paper, pulp, and rubber accounts for the largest share of forest loss from degradation. This process is often managed and planned so that forests can regrow after the harvest.

Shifting agriculture and wildfires each account for around 5 million hectares or one-fourth of annual forest loss. In both cases, forests can replenish if the land is left unused.

Urbanization—the conversion of forests into land for cities and infrastructure—is by far the smallest contributor, accounting for less than 1% of annual forest loss.

How Much Carbon Do Forests Absorb?

The world’s forests absorbed nearly twice as much carbon dioxide (CO₂) as they emitted between 2001 and 2019, according to research published in Nature.

On a net basis, forests sequester 7.6 billion tonnes of CO₂ equivalent (CO₂e) annually, which equates to around 15% of global CO₂e emissions. As the impacts of climate change intensify, protecting forests from deforestation and degradation is increasingly critical.

Carbon Streaming Corporation accelerates climate action through carbon credit streams on REDD+ projects that protect the Earth’s forests. Click here to learn more now.

Where does this data come from?

Source: Our World in Data

Datastream

Ranked: Top 10 Foreign Policy Concerns of Americans

As the world’s superpower, the U.S. has major influence in world events. Which foreign policy concerns stand out for Americans?

Published

3 weeks ago

November 7, 2022

Avery Koop

The Briefing

Political leanings aside, terrorism remains a top issue of concern for Americans
Previous top issues, such as disinformation and U.S.–China relations, now rank lower

In the United States, there is a distinct difference on top foreign policy concerns between Democrats and Republicans.

This chart uses data from Morning Consult to assess the top policy concerns of Americans.

The Top Concerns

Overall, the average American is most concerned about terrorism, immigration, and drug trafficking. Interestingly, this list corresponds with the concerns of the average Republican, though falling in a different order.

Meanwhile, Democrats are chiefly worried about climate change, another global pandemic, and terrorism.

Here’s a breakdown of the policy concerns at large and across political parties.

Overall Rank with Americans	Foreign Policy Concern	Share of Voters Listing it as a Top Concern	Share of Democrats Listing it as a Top Concern	Share of Republicans Listing it as a Top Concern
#1	Terrorism	49%	38%	62%
#2	Immigration	43%	22%	67%
#3	Drug trafficking	43%	30%	59%
#4	Cyberattacks	39%	35%	40%
#5	Climate change	38%	54%	17%
#6	Preventing a global economic crisis	32%	33%	31%
#7	Securing critical supply chains	30%	27%	34%
#8	Preventing another global pandemic	30%	38%	22%
#9	Russia's invasion of Ukraine	27%	33%	21%
#10	Protecting human rights globally	25%	31%	18%
#11	Preventing disinformation	24%	29%	21%
#12	U.S.-China relations	24%	19%	31%
#13	Iran nuclear deal	21%	19%	24%
#14	Upholding democracy globally	15%	22%	8%

Notably, the concern around U.S.-China relations ranks considerably low, as does preventing disinformation. Upholding democracy worldwide ranks extremely low with Republicans.

America’s Foreign Policy

Along party lines, the results are not surprising. Democrats skew towards multilateralism and want to engage with foreign bodies and other countries to tackle global issues. Republicans are generally more concerned with what’s happening at home.

Looking at the country as a whole and its relations with other nations, however, Americans lean more towards an America-first focus. According to Morning Consult, 39% of registered voters want to decrease U.S. involvement in other countries’ affairs, whereas 20% want to increase it; 30% want to keep the status quo.

Here’s a closer look at Americans’ desire to get involved in a variety of foreign policy initiatives:

Issue	Increase Efforts	Decrease Efforts	Neither
Overseas Troop Deployment	21%	37%	30%
Trade and Tariffs	41%	15%	29%
Involvement with International Organizations	35%	21%	32%
Resolution of Military Disputes	38%	16%	33%
Resolution of Economic Disputes	43%	13%	31%

As of October 2022

The U.S. Midterm Elections

With midterm elections underway, America’s foreign policy may not be the most important factor for voters. Pew Research Center found that in these congressional elections, foreign policy only ranked 12th among other key issues considered “very important” by registered voters.

The top five concerns of voters in these midterms are:

The economy
The future of democracy within the U.S.
Education
Healthcare
Energy policy

Regardless, the U.S. has a massive impact in foreign affairs and the results of the country’s midterm elections will likely cause a ripple effect globally. If Republicans win the House—which is looking extremely likely—and the Senate, President Biden’s foreign policy initiatives and priorities could be drastically restricted.

Where does this data come from?

Source: Morning Consult

Data notes: This ranking is made using the share of registered U.S. voters who identified the given issue as a top 5 concern for the country. For example, only 30% of registered voters said securing critical supply chains was a top 5 concern which is why it’s #7, whereas 43% said immigration was a top concern, ranking it at #2.