Note: This post was updated on September 21, 2020.

We can’t imagine there are many people who get excited about a trip to their local bank. Unless you have a penchant for capless ballpoint pens, uncomfortable waiting room chairs, and stale hard candies, there’s not much reason to visit your bank’s nearest retail branch. More likely, visiting the bank feels like a waste of time. You search for parking, you wait in a long line, you fill out a form or discuss a question you easily could have handled online — if only your bank would let you or provide an FAQ that showed you how. 

As a result, it’s not terribly surprising that our clients tell us they don’t visit branches very often. Accordingly, over 30% of our clients surveyed haven’t visited a bank branch in at least a year.

We think the future of banking is branchless, and we’re excited to build that future. If you haven’t given much thought to your relationship with bank branches, here are some things to consider.

Branches cost you money

By one estimate, it costs between $200,000 and $400,000 a year to operate a bank branch. Someone needs to pay for these branches, and it ends up being customers. If you assume $300,000 in annual costs and divide it by the national average of approximately 1,500 customers served per branch, that works out to approximately $200 per customer per year to maintain that branch. When your bank branch installs a coffee bar or a grand piano in a misguided attempt to impress you and appear cool, you end up paying for those expensive “benefits” even if you have no interest in spending additional time (or any time at all) at your bank.

No branches means no fees

More branches mean more account fees. Traditional banks have long charged fees as a way of generating revenue and paying the large overhead costs associated with maintaining a network of branches. In recent years, fintech companies have disrupted the traditional banking industry by offering banking services with no account fees. Unlike the business models of traditional banks, fintech companies’ business models allow for this because they don’t have large networks of retail branches to open and operate. In short, if you bank with an institution that doesn’t have to maintain branches, they are much less likely to nickel and dime you with annoying fees.

The customer experience stinks

Bank branches were built for your parents, not for you. Baby boomers are accustomed to going to their local branch to sign papers, ask questions, and shake hands. But this isn’t the experience you’re interested in. 

Instead, you want convenience. You want to manage your finances from an app on your phone – you don’t want to wait on hold to speak to a representative, or worse, visit a branch to speak with someone in person while they try to upsell you additional services. 

That’s why at Wealthfront, we build our products to be convenient and easy to use so you never need to talk to us (although our highly qualified team of Product Specialists is always here if you need them). For example, our clients are often surprised to learn how easily they can get cash by using our Portfolio Line of Credit. Instead of making multiple trips to their bank, filling out a ridiculous amount of paperwork, and waiting weeks to get a loan, Wealthfront clients can get a loan secured by their Investment Account with just a few taps on their phone and have cash as soon as the next day — and at a lower interest rate than they would pay a bank.

Bank branches are already failing

Branches pose an existential threat to banks, and they’re already becoming a thing of the past. Over the last decade, branches have been shuttering at a precipitous rate. According to a study conducted by Quartz using FDIC data, 12,000 full-service U.S. bank branches closed their doors between 2010 and 2019. We expect that trend to continue and even accelerate as COVID-19 speeds up bank digitization and more customers adopt digital banking services. There’s no guarantee your local bank branch will remain open, and Quartz even built a tool to help you predict when it might close. 

At Wealthfront, we offer nextgen banking services without branches. This means you can enjoy high-interest checking, keep your $200 each year, and do better things with your time than wait in line to speak with a teller. Wealthfront’s app integrates with all of your accounts and uses technology to help you conveniently manage your money. Our free service Autopilot can even automate your savings strategy. Best of all, you can do all of this from the comfort of your own couch, knowing you’re building the financial future you want.

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Portfolio Line of Credit is a margin lending product offered exclusively to clients of Wealthfront Advisers by Wealthfront Brokerage LLC. You should consider the risks and benefits specific to margin when evaluating your options. Learn more about these risks in the Margin Handbook.

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Portfolio Line of Credit is a margin lending product offered exclusively to clients of Wealthfront Advisers by Wealthfront Brokerage LLC. You should consider the risks and benefits specific to margin when evaluating your options. Learn more about these risks in the Margin Handbook.

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About the author(s)

The Wealthfront Team believes everyone deserves access to sophisticated financial advice. The team includes Certified Financial Planners (CFPs), Chartered Financial Analysts (CFAs), a Certified Public Accountant (CPA), and individuals with Series 7 and Series 66 registrations from FINRA. Collectively, the Wealthfront Team has decades of experience helping people build secure and rewarding financial lives. View all posts by The Wealthfront Team

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banks, fees