ALBANY — Just as many retail merchandise companies have beefed up their online presence while downsizing physical stores, many banks have closed branches, encouraging customers to use web-based services for their account services.
It’s a trend that has had a significant impact on residents of rural counties.
According to the New York State Association of Counties, small business owners, seniors and people who lack transportation bear the brunt of bank closures.
But the association doesn’t just lament the trend.
In a resolution recently adopted by the group representing county governments, it urges Governor Kathy Hochul and the state legislature to launch an investigation into closing bank branches in rural counties.
“The counties are seriously concerned that the closure of additional local bank branches will put communities and their consumers in a difficult state if New York State does not initiate an investigation into this crisis,” the association states in its resolution.
The association also notes that “there is no reason to believe that this trend will dissipate without adequate intervention.”
A reduction in the number of bank branches has been taking place nationwide since 2009, a year marked by headlines reporting the financial crisis hitting the economy. Until that time, the number of bank branches had been increasing for decades.
Closures, according to federal data, accelerated during the pandemic, with the number of bank branches declining nearly 4% between 2020 and 2021, with more than 3,200 branches closed.
Many consumers have adapted to the expansion of online banking services. But the Association of Counties notes that banking “deserts” in rural areas are a major problem due to the fact that many communities lack reliable Internet access.
In a statement sent to CNHI, Clare Cusack, president and CEO of the New York Bankers Association, said: “Bankers are committed to meeting their customers’ demands for service and convenience. Today, there is an unprecedented range of consumer banking options, and networks are changing as a result of customer choice.
“To serve customers in areas where building or maintaining a branch is not feasible, some banks are introducing innovative technologies to serve customers safely and conveniently,” Cusack added.
The reduction of banking services in rural regions of the country has also raised the concern of the federal Consumer Financial Protection Bureau.
In a report last April, the agency noted that most banking “deserts,” defined as having no branches within a 10-mile radius of a census tract center, are in rural areas.
“Overall, rural census tracts are 10 times more likely to be in a banking wilderness than urban areas,” the bureau found.
Beyond the statistics, declining banking services in rural areas has resulted in increased financial challenges for residents.
“Rural consumers are more likely to be credit invisible, forcing them to turn to more expensive alternatives to bank credit, such as payday loans and pawnbrokers,” the federal consumer agency said. “And, lower credit scores mean rural consumers pay higher rates on their mortgages, even though they are less able to afford it.”