The number of active bank branches worldwide declined to 410,000 in 2025, down from 530,000 in 2018, according to the Bank for International Settlements. During the same period, mobile banking app users grew from 1.9 billion to 3.6 billion. The data captures a structural shift that has been decades in the making: the center of gravity in retail banking has moved from physical locations to digital platforms, fundamentally changing how customers interact with their money and how banks organize their operations.
The Branch Era and Its Decline
For most of the 20th century, bank branches were the sole point of access for financial services. Every transaction, from deposits and withdrawals to loan applications and account openings, required a visit to a physical location during business hours. Branch networks were a competitive asset: the bank with the most branches in a market typically had the most customers. In the United States, the number of bank branches peaked at approximately 99,000 in 2009.
The decline began with ATMs in the 1970s, which allowed basic cash transactions outside branch hours. Online banking in the late 1990s moved balance checks and transfers to desktop computers. But the inflection point came with the smartphone. According to a McKinsey analysis of the branch-to-mobile banking transition, mobile banking app usage surpassed branch visits for the first time in the US in 2015. By 2025, the average mobile banking user made 38 app visits per month, compared with fewer than 2 branch visits per year.
Digital banking customers are expected to exceed 3.6 billion by 2028, and each new digital banking customer reduces the economic justification for maintaining physical branches.
How Mobile Banking Replaced Branch Functions
Mobile banking apps now handle virtually every function that once required a branch visit. Account opening uses digital identity verification with smartphone cameras. Deposits happen through mobile check capture. Transfers and bill payments are instant. Loan applications are completed and approved digitally. Even financial advice, once available only through face-to-face consultations, is now delivered through AI-powered chatbots and in-app recommendations.
According to Statista’s data on mobile banking feature usage, the most frequently used mobile banking features in 2025 were balance checks (92% of users), transfers (85%), bill payments (72%), mobile deposit (58%), and budgeting tools (34%). 60% of consumers now prefer digital financial services, and the breadth of features available through mobile apps makes that preference practical for most banking needs.
The remaining branch functions that are difficult to digitize include complex advisory services for high-net-worth clients, small business relationship banking, and cash-heavy transactions for certain business types. These segments represent a small fraction of total retail banking interactions but continue to justify a reduced branch presence in many markets.
The Impact on Bank Economics
The shift from branches to mobile apps is restructuring bank economics. Branch operations are the single largest cost center for retail banks, typically accounting for 40% to 50% of total retail operating expenses. According to a 2025 Accenture study on branch closure economics, each branch closure saves a bank between $1.5 million and $3 million per year in operating costs, including real estate, staffing, security, and utilities.
In the US, more than 4,000 branches closed in 2025 alone. In the UK, more than half of all bank branches have closed since 2015. Banks are reinvesting the savings into digital platform development, AI capabilities, and customer acquisition for digital channels. Fintech platforms are growing faster than traditional banks, and branch network costs are one of the primary reasons for the growth differential.
Access Concerns and Regulatory Responses
Branch closures raise legitimate concerns about access, particularly for elderly consumers, rural communities, and people with limited digital literacy. In the UK, the Financial Conduct Authority introduced rules in 2023 requiring banks to assess the impact of branch closures on vulnerable customers. Sweden, where cash use has fallen below 10% of transactions, has introduced legislation requiring banks to maintain minimum cash services in underserved areas.
According to a BCG study on banking access during the digital transition, approximately 15% of adults in developed markets and 40% in developing markets still rely on physical banking channels for at least some transactions. Fintech is expanding financial access for over 1.7 billion unbanked adults, but bridging the digital divide for populations that cannot use mobile banking remains a challenge that technology alone does not fully solve.
The trajectory from 530,000 branches to 410,000 in seven years is accelerating. Industry projections suggest the global branch count will fall below 300,000 by 2030. The institutions that manage this transition most effectively, maintaining access while reducing costs, will be the ones best positioned for the next era of retail banking.
