Bank branches are closing, and they’re leaving the most disadvantaged areas behind

In the US and UK, disadvantaged areas have fewer bank branches, and are losing them at a higher rate. (Justin Tallis/AFP via Getty Images)

The coronavirus pandemic has led to significant changes in how people approach banking.

A recent survey found that four out of five Americans (78%) were concerned about going to their local bank or grocery store. More than half of respondents (55%) said they would visit bank branches less often, and another quarter (26%) said they would avoid face-to-face banking altogether.

But even before the Covid-19 outbreak, banking was increasingly shifting to virtual spaces and away from physical ones. In the UK, the number of bank and building society branches has fallen by 22% from 2012 to 2019, according to a House of Commons Library report. The same thing has been happening in most developed countries.

Northern European and Baltic countries have registered some of the biggest drops in the number of bank branches per 100,000 adults in the past few years. The US and Australia, on the other hand, have slightly more modest declines.

Banks are closing their branches in order to save money while more and more customers are using online banking services.

Where are bank branches being closed?

A CityMetric analysis of figures from the Federal Deposit Insurance Corporation (FDIC), a US government agency that insures deposits from commercial and savings banks, reveals that the country’s most disadvantaged areas have less than half as many branches as the most well-off areas. There are now 4,854 bank branches in the 10% most disadvantaged areas across the US, compared to 11,042 branches in the most well-off 10% of areas.

In the chart below, the 10% most disadvantaged neighbourhoods in America are represented by the first bar, while the 10% most privileged are represented by the tenth bar.

The most underserved neighbourhoods already have fewer banks, and they're losing them at a faster rate while gaining far fewer new branches. 

Between the beginning of 2014 and the middle of June 2020, almost 17,500 bank branches were closed in the US and fewer than 7,000 were opened, according to an analysis of figures from FDIC and S&P Global. (Figures released by the FDIC and S&P Global have some differences, but they are minor and should not radically affect the results of the analysis. The locations of bank branches in the FDIC data have been determined as the centre of the ZIP Code they’re in.)

The most well-off American neighbourhoods now have just 7% fewer bank branches than they did at the beginning of 2014, compared to declines between 11 and 13% in all other neighbourhoods.

Things look similar in the UK. According to Which?, a British consumer issues resource, 3,292 bank branches closed in the UK from January 2015 to August 2019, with the North West of England, the South East of England, and Scotland bearing the brunt of the change.

CityMetric analysis reveals that in the UK, just like in the US, disadvantaged areas have been hit particularly hard.

Just 42 bank branches were closed in the 10% most well-off neighbourhoods in cities and major towns in England and Wales. The worst-off 10% of areas, on the other hand, saw more than three times as many banks disappear in the same time period.

A note on "disadvantage"

It is worth noting here that there is no formal definition of disadvantaged areas in the US. 

In England and Wales, disadvantaged areas are those with the lowest scores in government-released indices of deprivation. These indices take several metrics into account: not just income, but also data around employment, education, health, crime, barriers to housing and services, and the local living environment.

While an official equivalent doesn’t exist in the US, a group of researchers proposed the creation of a similar index based on available census data. We have used that in our analysis above.

Who will go underserved?

While officials and bank executives have claimed that the vast majority of bank users will not be seriously affected by bank closures, some people rely on brick-and-mortar banking.

Branches are important for small businesses, many of which may operate with a lot of cash. A report from “Move Your Money” found that UK areas that lose their last bank branch register a 104% drop in small business lending growth.

Bank closures also affect the elderly and disabled people, many of whom are still unable or unwilling to use digital banking services.

Analysis by S&P Global also revealed that banks are closing at a higher rate in majority-Black neighbourhoods in the US. From 2010 to 2018, the number of bank branches in majority-Black areas shrank by 14.6%, compared to the 9.7% average in all other areas.

Income was not an indicator of why Black communities are losing more banks – wealthier Black areas were just as likely to see bank closures as poorer ones.

How can bank closures be mitigated?

The gradual vanishing of brick-and-mortar banking is likely to be accelerated by the coronavirus crisis.

According to Fidelity National Information Services (FIS), which works with 50 of the world’s largest banks, there was a 200% jump in new mobile banking registrations in early April.

But there are still a number of ways that banks can serve as many customers as possible.

Some banks are helping older customers transition to digital banking by offering them extended support online, over the phone or video calls. This is meant to emulate the customer support experience of bank branches remotely.

Bank services can also be consolidated to make up for reduced foot traffic. In the UK, post offices give people access to the vast majority of banking services, although post offices are threatened by closures as well.

Some banks are also setting up temporary or mobile banking units. British banks have even launched “Business Banking Hubs”, joint branches that target small business customers. A similar approach could be used to launch joint bank branches for people in underserved neighbourhoods.

There is no question that banks still need to exist. One survey found that some 75% of Americans still visit a physical bank branch at least once a month.

For a lot of bank users, brick and mortar is not only preferable, it is necessary. And while city centres won’t see their banks go away anytime soon, those living in poorer parts of town may need access to banking even more.

Nicu Calcea is a data reporter at New Statesman Media Group.


Urgently needed: Timely, more detailed standardized data on US evictions

Graffiti asking for rent forgiveness is seen on a wall on La Brea Ave amid the Covid-19 pandemic in Los Angeles, California. (Valerie Macon/AFP via Getty Images)

Last week the Eviction Lab, a team of eviction and housing policy researchers at Princeton University, released a new dashboard that provides timely, city-level US eviction data for use in monitoring eviction spikes and other trends as Covid restrictions ease. 

In 2018, Eviction Lab released the first national database of evictions in the US. The nationwide data are granular, going down to the level of a few city blocks in some places, but lagged by several years, so their use is more geared toward understanding the scope of the problem across the US, rather than making timely decisions to help city residents now. 

Eviction Lab’s new Eviction Tracking System, however, provides weekly updates on evictions by city and compares them to baseline data from past years. The researchers hope that the timeliness of this new data will allow for quicker action in the event that the US begins to see a wave of evictions once Covid eviction moratoriums are phased out.

But, due to a lack of standardization in eviction filings across the US, the Eviction Tracking System is currently available for only 11 cities, leaving many more places facing a high risk of eviction spikes out of the loop.

Each city included in the Eviction Tracking System shows rolling weekly and monthly eviction filing counts. A percent change is calculated by comparing current eviction filings to baseline eviction filings for a quick look at whether a city might be experiencing an uptick.

Timely US eviction data for a handful of cities is now available from the Eviction Lab. (Courtesy Eviction Lab)

The tracking system also provides a more detailed report on each city’s Covid eviction moratorium efforts and more granular geographic and demographic information on the city’s evictions.

Click to the above image to see a city-level eviction map, in this case for Pittsburgh. (Courtesy Eviction Lab)

As part of their Covid Resource, the Eviction Lab together with Columbia Law School professor Emily Benfer also compiled a scorecard for each US state that ranks Covid-related tenant protection measures. A total of 15 of the 50 US states plus Washington DC received a score of zero because those states provided little if any protections.

CityMetric talked with Peter Hepburn, an assistant professor at Rutgers who just finished a two-year postdoc at the Eviction Lab, and Jeff Reichman, principal at the data science research firm January Advisors, about the struggles involved in collecting and analysing eviction data across the US.

Perhaps the most notable hurdle both researchers addressed is that there’s no standardized reporting of evictions across jurisdictions. Most evictions are reported to county-level governments, however what “reporting” means differs among and even within each county. 

In Texas, evictions go through the Justice of the Peace Courts. In Virginia they’re processed by General District Courts. Judges in Milwaukee are sealing more eviction case documents that come through their courtroom. In Austin, Pittsburgh and Richmond, eviction addresses aren’t available online but ZIP codes are. In Denver you have to pay about $7 to access a single eviction filing. In Alabama*, it’s $10 per eviction filing. 

Once the filings are acquired, the next barrier is normalizing them. While some jurisdictions share reporting systems, many have different fields and formats. Some are digital, but many are images of text or handwritten documents that require optical character recognition programs and natural language processors in order to translate them into data. That, or the filings would have to be processed by hand. 

“There's not enough interns in the world to do that work,” says Hepburn.

Aggregating data from all of these sources and normalizing them requires knowledge of the nuances in each jurisdiction. “It would be nice if, for every region, we were looking for the exact same things,” says Reichman. “Instead, depending on the vendor that they use, and depending on how the data is made available, it's a puzzle for each one.”

In December of 2019, US Senators Michael Bennet of Colorado and Rob Portman of Ohio introduced a bill that would set up state and local grants aimed at reducing low-income evictions. Included in the bill is a measure to enhance data collection. Hepburn is hopeful that the bill could one day mean an easier job for those trying to analyse eviction data.

That said, Hepburn and Reichman caution against the public release of granular eviction data. 

“In a lot of cases, what this gets used for is for tenant screening services,” says Hepburn. “There are companies that go and collect these data and make them available to landlords to try to check and see if their potential tenants have been previously evicted, or even just filed against for eviction, without any sort of judgement.”

According to research by Eviction Lab principal Matthew Desmond and Tracey Shollenberger, who is now vice president of science at Harvard’s Center for Policing Equity, residents who have been evicted or even just filed against for eviction often have a much harder time finding equal-quality housing in the future. That coupled with evidence that evictions affect minority populations at disproportionate rates can lead to widening racial and economic gaps in neighborhoods.

While opening up raw data on evictions to the public would not be the best option, making timely, granular data available to researchers and government officials can improve the system’s ability to respond to potential eviction crises.

Data on current and historical evictions can help city officials spot trends in who is getting evicted and who is doing the evicting. It can help inform new housing policy and reform old housing policies that may put more vulnerable citizens at undue risk.

Hepburn says that the Eviction Lab is currently working, in part with the ACLU, on research that shows the extent to which Black renters are disproportionately affected by the eviction crisis.

More broadly, says Hepburn, better data can help provide some oversight for a system which is largely unregulated.

“It's the Wild West, right? There's no right to representation. Defendants have no right to counsel. They're on their own here,” says Hepburn. “I mean, this is people losing their homes, and they're being processed in bulk very quickly by the system that has very little oversight, and that we know very little about.”

A 2018 report by the Philadelphia Mayor’s Taskforce on Eviction Prevention and Response found that of Philadelphia’s 22,500 eviction cases in 2016, tenants had legal representation in only 9% of them.

Included in Hepburn’s eviction data wishlist is an additional ask, something that is rarely included in any of the filings that the Eviction Lab and January Advisors have been poring over for years. He wants to know the relationship between money owed and monthly rent.

“At the individual level, if you were found to owe $1,500, was that on an apartment that's $1,500 a month? Or was it an apartment that's $500 a month? Because that makes a big difference in the story you're telling about the nature of the crisis, right? If you're letting somebody get three months behind that's different than evicting them immediately once they fall behind,” Hepburn says.

Now that the Eviction Tracking System has been out for a week, Hepburn says one of the next steps is to start reaching out to state and local governments to see if they can garner interest in the project. While he’s not ready to name any names just yet, he says that they’re already involved in talks with some interested parties.

*Correction: This story initially misidentified a jurisdiction that charges $10 to access an eviction filing. It is the state of Alabama, not the city of Atlanta. Also, at the time of publication, Peter Hepburn was an assistant professor at Rutgers, not an associate professor.

Alexandra Kanik is a data reporter at CityMetric.