Internet Banking Contributed to the Closure of Over 9,000 Banks and 50,000 Layoffs in the EU

Banks in the European Union closed 9,100 branches and laid off around 50,000 workers last year due to the increasing popularity of internet banking, according to a study by the European Banking Federation.

At the end of last year, the number of branches in the EU fell to 189,000, which is 4.9 percent less than at the end of the previous year, the federation reported on Tuesday based on collected data. The sector employed about 2.8 million people at the end of 2016, the lowest since 1997, their analysis shows.

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Since 2008, a total of 48,000 bank branches have closed in the EU – more than one-fifth. Last year, the trend accelerated compared to 2015 when their number decreased by three percent. Banks closed expensive physical branches to reduce costs due to the shift of many customers to electronic payments, as well as digital and mobile banking, but also due to low interest rates.

Due to low interest rates, loans are cheaper, so banks earn less on this type of service as well as on investments.

In some countries, banks reacted to low interest rates by closing branches, with a record 762 branches expected to close in Britain this year.

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As an alternative solution, banks have found ways to introduce new fees for previously free services, including maintaining basic bank accounts and cash withdrawals.

A trend of consolidation or merging of lenders to improve profitability has also been observed, which, according to the analysis of the European Banking Federation, began in 2009. Accordingly, at the end of last year, a total of 6,596 banks operated in the EU – six percent less than at the end of the previous year.