Over the past few weeks, Bank of America (BAC - Free Report) has been announcing closure of its financial centers. Recently, the bank informed the Office of the Comptroller of the Currency that it plans to shutter branches in Washington, Henderson, Highlands and Marion. Nonetheless, ATM service will likely be retained in these areas.
Apart from these, four branches in the rural areas of North Carolina will be closed as well. Notably, all the employees of these financial centers are being offered jobs elsewhere within the bank.
Per the BofA spokeswoman Jennifer Darwin, the primary reason for shutting down branch network is “shift in how our clients are banking.” Increased use of mobiles and online banking for doing basic banking transactions is lowering the financial viability of keeping branches.
Darwin wrote in an email, “Our decision here is really based on the need to balance customer preference and opportunities for growing our business.”
Some of the other states where BofA intends to close financial centers are Kansas, Illinois and Arizona. Almost all these branches will close in July-August.
Also, BofA is undertaking initiatives to introduce digital banking options, including its AI financial advisor – Erica – which had nearly 6.3 million users as of Mar 31, 2019. The company’s digital payments service – Zelle – is also making its presence felt with roughly 5.4 million users as on the same date.
Further, BofA is planning to expand to new cities, open nearly 500 new financial centers and redesign 2,500 centers with technology upgrades by 2021. The company is opening fully automated branches that will feature ATMs and video conferencing facility. Further, it has announced plans to add 2,200 more ATMs to its network.
All these efforts will support cross-selling opportunities, with an aim to further strengthen the company’s Consumer Banking segment.
Shares of BofA have rallied 15.3% so far this year, outperforming the industry’s rise of 11.6%
Currently, BofA carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Banks Shutting Down Branches
Last month, U.S. Bancorp (USB - Free Report) announced its plan to close nearly 10-15% of branch network over the next two years. The key reason for this is to align its branch network to the changing customer needs.
Additionally, JPMorgan (JPM - Free Report) and Citigroup (C - Free Report) are undertaking similar actions based on financial viability and changing clients’ banking preferences toward online and mobile banking.
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