Does America still need physical banks?

Not a week goes by without another bank closing local branches. In the first quarter of 2025 alone, over 300 U.S. bank branches have been marked for closure. These are not isolated closures in sleepy, out-of-the-way American towns. They span across major states including New York, Pennsylvania, California, Illinois, Michigan, Texas and New Jersey, touching economic centers and underserved communities alike.  

This is not good. 

Banks are the backbone of American communities, no matter what their economic strata. Much like post offices, they are a familiar part of our financial infrastructure, often providing friendly support for the American dream. It is hard to believe that such consequential decisions are voluntary. 

To be sure, the American banking system is undergoing fundamental, structural transformation.  In theory, this transformation promises modern efficiency. On the other hand, when banks withdraw, local economies suffer, especially in economically depressed areas without alternative financial institutions or broadband access.  

Digital banking has surged in popularity, particularly among younger generations. According to Statista, only 45 percent of U.S. account holders now conduct business in-person, down from 53 percent in 2019. My own kids — all millennials — question why we even go to the bank at all. For these Americans, the branch bank is becoming a relic of the analog past. But for others, it remains a lifeline. 

Not every consumer is “digitally banked” — rural communities, elderly citizens and lower-income families still depend on in-person banking for everyday transactions, financial advice and trust. These are not laggard populations. There are thousands of Americans navigating the economy with limited digital access. When branches close, many consumers are effectively shut out of the financial system. 

Wells Fargo, TD Bank, Flagstar, U.S. Bank, Bank of America and JPMorgan Chase are all consolidating their physical footprints and closing branches. According to the Office of the Comptroller of the Currency, entire ZIP codes may soon lack a single walk-in bank. Branch closures often lead to “banking deserts,” and that can lead to increased reliance on predatory lenders, expensive check-cashing services, and financial stress.  

Such an outcome portends a negative multiplier effect for those communities affected. Fewer branches mean fewer local relationships, fewer small business loans, and fewer touchpoints for underserved communities. Many small businesses depend on local bank relationships for credit lines, same-day deposits and tailored lending terms. Bank closures undermine small-business access to capital, basic financial services, and the anchors they provide for economically healthy consumers.  

In this new environment, Congress cannot remain passive. Financial access should not be a luxury for the well-heeled only. It is a pillar of economic participation. Congress has both the statutory oversight and the public obligation to act decisively. 

Modernizing the Community Reinvestment Act to reflect the digital realities of 21st-century banking would be a good start. Tax incentives should be extended to banks that maintain or expand physical access in rural and low-income areas. And Congress should require banks to publicly report the impact of branch closures on communities. 

In addition, federal funding should be prioritized for expanding broadband access and digital literacy in areas affected by these closures. There are several public-private partnerships devoted to financial literacy in disadvantaged communities. While necessary and good, these alone are not sufficient to serve those consumers adequately. Regulators should exercise extraordinary oversight on digital-only banks and fintechs whose market dominance threatens competition. 

Efficiency and innovation should not come at the expense of accountability and access. If Congress fails to legislate proactively, it will legislate reactively at a much greater cost.  

The branch may be disappearing but the mandate for congressional stewardship remains.  

Access to capital is still the foundation of the American dream, and it should not be paywalled behind a password. As more banks close their doors, Congress must open its eyes to a problem that it can readily solve. 

Adonis Hoffman served  in senior legal roles in the U.S. House of Representatives and at the FCC. He writes on business, law and policy.