Shrinkage of bank branches occurring at an accelerated rate
The number of bank and savings bank branches in Germany has experienced a significant decrease, amounting to an 8.4% decline last year, with 1,631 branches closing down. This trend is primarily due to cost-efficiency pressures and the broader shift towards digital banking, according to a report by the Bundesbank.
The decline is mainly linked to banking groups and regional savings banks that are consolidating their physical presence. While the exact names are not detailed in the search results for Germany, the overall pattern in Europe shows that large banking groups and regional savings banks are actively reducing their networks by closing less profitable or redundant branches.
The shift towards online banking is a key factor in this decline. Banks and savings banks are seeking to optimize their branch networks to adapt to changing customer behaviors, as more banking transactions move online. This trend corresponds with the broader industry movement supported by ongoing regulatory and technological developments incentivizing mergers, consolidation, and scaling efforts within banking institutions, as well as competition and efficiency gains from digital services.
In addition to cost-efficiency mandates and digital transformation, the decline in credit institutions includes those that merged with partners. Twenty-five cooperative banks merged with partners in the past year. Cooperative Volks and Raiffeisen banks have 6,402 branches, making them the second-largest branch providers.
The decline in branches is a continuing trend in Germany. The total number of credit institutions in Germany has decreased to 1,368, a net decrease of 35 from the previous year. This is due in part to a weak earnings situation in the low-interest phase.
Ten new credit institutions, mainly foreign banks, established a presence in Germany in the past year. However, the number of new branches in other sectors is not specified.
The figures were reported by the Bundesbank, highlighting the ongoing transformation of the German banking sector in response to changing market conditions and customer preferences. As digital services continue to gain traction, it is expected that the trend towards a reduced need for physical branches will persist, with banks continuing to adapt and optimize their operations accordingly.
- The shift towards digital banking, coupled with cost-efficiency mandates and ongoing regulatory and technological developments, is encouraging banks and savings banks to optimize their branch networks by adapting to changing customer behaviors and consolidating their physical presence.
- In addition to the closure of less profitable or redundant branches, the decline in credit institutions in Germany also includes those that merged with partners, such as the 25 cooperative banks that merged in the past year.
