The number of bank branches in Taiwan has continued to decline since 2014 as the rapid growth of digital banking has reduced demand for in-person services. In addition, younger people are more inclined to use online banking than go to a brick-and-mortar location.
Last month, a Singapore-based bank announced it would remove its 40 automated teller machines (ATMs) in Taiwan by early next year, saying its customers are shifting to online services. This trend is occurring worldwide, but it has its own reasons in Taiwan’s idiosyncratic economic and societal environment.
The number of bank branches per 100,000 adults grew by only about 1 percent globally in the past decade, a survey released in September by the IMF showed. It attributed the muted growth to the declining number of branches in the advanced economies of North America and Europe, even though low and middle-income countries experienced growth close to 19 percent.
The IMF report attributed the development to two trends: First, access to banks is growing in low and middle-income countries where there is unmet demand for financial services. Second, the decline in the number of bank branches in high-income countries reflects banks’ cost-cutting measures and consumers shifting to online banking.
However, the increased use of online banking brings with it concerns over data privacy and security. In the report, the IMF urged stronger consumer protections and increased transaction security.
As for ATMs, their decrease worldwide last year coincided with a shift toward a cashless economy, as banks in some markets worked to deal with cost pressures and mobile payment services, a report released in May by London-based Retail Banking Research showed. The number of ATMs worldwide fell for the first time last year, down 1 percent to about 3.24 million, dragged by decreases of 6.8 percent in China, 0.9 percent in the US and 0.2 percent in Japan, the report showed.
Even so, government-backed, financial-inclusion initiatives have continued to drive ATM growth in developing markets across the Asia-Pacific, the Middle East, Africa and Latin America, the report said.
In Taiwan, bank branches are likely to continue closing, due to the prevalence of online banking and the emergence of other financial technology, the Financial Supervisory Commission said. Last year, the number fell to a seven-year low of 3,403 branches and could reach its lowest this year, the commission predicted.
However, the number of ATMs has grown steadily over the past three years in Taiwan, reaching 30,080 as of the end of August — equivalent to one for every 767 people, leaving Taiwan with one of the highest ATM densities, the commission said.
The loss of bank branches in Taiwan is similar to other markets as banks try to cope with market dynamics and reinvent themselves, but cash remains king here and people are slow or unwilling to adopt non-cash payment methods, so ATMs remain prevalent. Cash has practical benefits and there is a strong sentimental attachment to it among many people, making any short-term change in demand for ATMs unlikely.
While ATMs might be fading in other parts of the world, they are still here and it will be interesting to see how local banks continue to innovate and upgrade the services available at them, and whether they could replace conventional branches in rural areas or add alternative services.
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