Why the US Could Have Far Fewer Banks by 2055

The familiar bank branch is not about to vanish, but the system supporting it is becoming smaller, more concentrated, and increasingly digital. A new study¹ examining nearly nine decades of US banking data estimates that, under its base scenario, the country could have only 1,482 banks and 40,901 branches by 2055.

That would represent a striking change from the approximately 4,000 banks and 70,000 branches used as the study’s 2025 starting point. Yet the more important story is not the exact number of buildings that might remain. It is the changing economic logic of banking.

Software allows financial institutions to serve more customers without maintaining a location in every community. Larger banks can spread technology, cybersecurity, and regulatory costs across broader deposit bases. Fintech companies can separate individual services, such as payments or lending, from the traditional banking bundle. Stablecoins and decentralized finance add another potential layer of competition.

Together, these forces suggest that the future will not be divided neatly between banks and technology companies. Banking itself is becoming a technology business, while physical locations are shifting from routine transaction centres toward places for advice, relationship management, and complex financial decisions.

US Banking Consolidation Started Before Digital Banking

The study, conducted by Todd Feldman and Chris Yost-Bremm, analyzes Federal Deposit Insurance Corporation data covering 1934 through 2023. Its longest-running trend is the decline in the number of banking institutions.

In 1934, the United States had approximately 14,146 banks and only 3,000 branches. By 2009, the bank count had fallen to roughly 7,000, while the branch network had expanded to around 83,000 locations. Fewer banks were operating more locations.

This distinction matters because it prevents digital banking from receiving too much credit for consolidation. The number of institutions began declining substantially in the 1980s, well before smartphones and modern fintech platforms became common. Deregulation, interstate banking, mergers, economies of scale, failures, and rising compliance costs all contributed to the trend.

Between 1984 and 2023, the number of US banks declined by 72.16 percent, even as the number of branches increased by 68.16 percent. Only later did the two measures begin falling together. From 2007 through 2023, bank counts dropped 45.44 percent and branches declined 7.93 percent.

The industry therefore moved through two separate transformations. The first replaced many independent banks with larger networks. The second is now reducing the amount of physical infrastructure those networks require.

What The Banking Scenarios Show

The researchers used Monte Carlo simulations to explore how the system could evolve over 30 years. They ran 10,000 simulations for conservative, base, and aggressive scenarios, applying different annual contraction rates to banks and branches.

These figures are scenarios, not forecasts. The base case assumes banks contract at an average annual rate of 3.25 percent and branches at 1.75 percent. The aggressive case raises those rates to 4.5 percent and 3 percent, respectively. Small differences compounded over three decades produce dramatically different outcomes.

The paper also tested how well historical trend models predicted 2001 through 2023. The bank model produced a mean absolute percentage error of 17.64 percent, while the branch model reached 22.76 percent. That weaker branch performance demonstrates why the 2055 totals should not be treated as targets with calendar-like precision.

The valuable conclusion is directional: unless new bank formation accelerates or physical service models change substantially, the United States is likely to have fewer institutions and fewer branches.

Digital Finance Changes The Economics Of Distribution

Digital adoption strengthens that direction by separating financial activity from physical location. The FDIC’s national household banking survey found that almost half of banked US households primarily accessed their accounts through mobile banking in 2023. A customer who deposits cheques, transfers funds, applies for credit, and manages investments remotely has fewer reasons to visit a teller.

This does not make branches worthless. It changes which activities justify their cost. Cash-intensive businesses, older customers, complicated lending decisions, wealth management, and relationship-based commercial banking can still benefit from physical access. The branch of the future is consequently more likely to function as an advisory and acquisition centre than a high-volume transaction counter.

Three capabilities become increasingly important as this shift proceeds:

• Digital platforms that can acquire and serve customers efficiently
• Physical locations concentrated in markets where advice supports growth
• Enough scale to absorb compliance, security, and technology spending

This model helps explain why branch closures and branch openings can occur simultaneously. Industry totals may decline while individual banks invest in promising cities, relocate offices, or replace legacy sites with modern formats. According to a recent analysis, the US network contracted 14.8 percent between 2017 and 2025, but the pace of bank branch closures began slowing during 2025.

Stablecoins Expand The Competitive Boundary

The study includes DeFi applications, total value locked, and Tether’s market capitalization as indicators of digital finance growth. DeFi applications increased from 20 in 2018 to 1,100 in 2024, while Tether’s market capitalization grew from approximately $2 billion to more than $139 billion.

Those numbers demonstrate growth, but they do not prove that DeFi or stablecoins caused banks or branches to disappear. The paper explicitly avoids making that causal claim. Its digital-asset data cover a much shorter period than its banking data, and DeFi remains volatile. Total value locked rose to $180 billion in 2021, fell to $40 billion in 2022, and recovered to $87 billion by 2024.

The more defensible interpretation is that stablecoins expand the boundary of competition. They can move value around the clock, support programmable transactions, and connect users to blockchain-based markets. Securities.io has previously examined how stablecoin yield restrictions affect bank lending, illustrating that policymakers already view deposits and digital dollars as parts of an increasingly connected system.

Banks are also capable of adopting the underlying infrastructure. Tokenized deposits, blockchain settlement, custody, and regulated stablecoin services could allow established institutions to incorporate features pioneered outside banking. Recent initiatives involving Canadian banks adopting blockchain demonstrate how the likely outcome is convergence rather than outright replacement.

Bank Of Montreal Offers Investors A Hybrid Banking Strategy

For investors seeking exposure to this transition, Bank of Montreal offers a relevant example of how a large incumbent can combine digital scale with selective physical expansion. BMO trades on both the Toronto Stock Exchange and New York Stock Exchange under the ticker BMO.

The bank expanded its US presence substantially through the 2023 acquisition of Bank of the West. More recently, BMO announced plans to open approximately 150 financial centres over five years, including more than 130 in California. That expansion may initially appear to contradict a study forecasting fewer branches. In reality, it illustrates the strategic reallocation occurring beneath the national totals.

BMO is not trying to recreate yesterday’s evenly distributed branch network. It is concentrating physical investment in growth markets where local advice, commercial relationships, and customer acquisition may justify the expense, while digital channels handle routine activity. This hybrid approach could help larger institutions gain customers even as the industry’s overall footprint contracts.

The investment case still involves the usual banking risks, including credit losses, interest-rate sensitivity, regulation, integration costs, and competition for deposits. A shrinking number of banks does not guarantee that every large institution will outperform. Scale is valuable only when management converts it into better service, efficient technology, disciplined underwriting, and profitable customer growth.

The Future Of Banking Is Concentrated, Not Bankless

The study’s strongest contribution is not its precise estimate of 1,482 banks in 2055. It is the historical perspective showing that the meaning of a bank can change even when its core economic functions remain essential.

Customers will still need secure deposits, credit creation, payment services, and financial expertise. What may disappear is the assumption that each service requires a separate institution or nearby building. Digital delivery allows fewer organizations to reach more people, while physical locations become targeted tools instead of default infrastructure.

That transition creates opportunities for fintech companies, digital-asset networks, banking technology suppliers, and established institutions capable of modernizing. It also raises policy questions about competition, rural access, systemic concentration, and what happens when a smaller number of technology-dependent institutions carry more of the financial system.

The United States may indeed have far fewer banks and branches by 2055. The winners, however, will not necessarily be the companies that eliminate physical banking fastest. They will be the institutions that understand which services belong on a screen, which still benefit from a human relationship, and how to unite both channels economically.

References:

^{1. Feldman, T., & Yost-Bremm, C. (2026). Digital finance and the changing composition of banks. Next Research, 102392. https://doi.org/10.1016/j.nexres.2026.102392}