Banks are one of those institutions everyone expects to run 24 hours a day, seven days a week, due to the plethora of people that need their service. However, that isn’t often the case. In fact, banks close earlier than typical businesses, leading to the question, why do banks have such short opening hours?
Banks have short opening hours, and we can attribute that to these reasons:
- Banks have automated teller machines (aka ATMs)
- Operation cost
- Safety
- Mobile and online banking
- The books
Have you tried to deposit a check after work only to find out that your bank has closed? If so, you would probably want to know why banks close so earlier. Why can’t these institutions extend their closing times to cater to their huge customers? I have highlighted a few reasons below.
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Why Do Banks Have Such Short Opening Hours?
Here are some of the common reasons why banks have such short opening hours:
- Banks Have Automated Teller Machines
Many decades ago, ATMs were a mere figment of the imagination. But today, we have ATMs everywhere and they can be accessed by customers 24/7.
ATMs can carry out simple tasks like cash withdrawal or cash transfers from one saving account to another. In addition, CDMs (Cash Deposit Machines) are very similar to ATMs and perform most of the same functions but can also do things like accept checks and even cash deposits.
This means that banks don’t have to stay open past working hours anymore, as the most popular time to deposit checks were between 6-7:00 PM.
A long time ago, the tasks performed by ATMs and CDMs used to be carried out by bankers or tellers, who are often paid per hour.
ATMs cost around $2,000 to $8,000, although the average cost is around $2,300 to $3,000. In addition to the cost, there are monthly maintenance charges of around $40 to $60 each month ($480 to $720 per year).
Now, let’s compare the cost of an ATM to the salary of an average banker, which is a little over $40,000 annually on average that is a lot of ATMs! A key difference between bankers and those machines is that bankers (and tellers) often have to handle complicated or large transactions that machines can’t process.
This is why ATMs can’t totally replace bankers. The longer banks stay open, the more they would have to pay their workers, which is why banks aren’t open for longer than they are and tend to close earlier than typical businesses.
- Operation Costs
The longer banks remain open, the more their operating cost. At the end of the day, most banks are businesses, and most businesses aim to make a good profit.
Higher costs usually result in low profits; thus, closing earlier can allow banks to cut costs like electricity, security, etc.
These costs accrue over a year, meaning that although a little money is likely saved by closing a few hours earlier, this would be a huge amount in the long run.
- Safety
Most brick-and-mortar bank branches store money and other valuable items in-house. This can lure a lot of attention. Although bank robberies seem to be predominant in movies, the stats would surely be important to bank branch managers.
In just 2018, more than 3,000 bank robberies occurred in banks all over the U.S. The largest part of robberies occurred between 3-6 PM on Fridays. This is probably the reason some banks close at 5 PM, as it reduces the probability of robberies.
The number of robberies that occurred outside bank operating hours is quite lower than the number of robberies that happened while banks were still open. Generally, closing earlier helps guarantee the safety of the bank’s valuables.
If you operated a bank, wouldn’t you close early to save your valuables? I bet you would!
- Mobile and Online Banking
These days, ATMs aren’t even the most advanced form of tech available to banks. Most banks offer mobile and online platforms on which users can carry out tasks anywhere from signing up for a credit card to initiating a large international transfer, which used to be carried out at physical bank branches.
Digital banks (a type of Fintech Company) can also be completely virtual and accessed through mobile phones or computers, meaning they don’t even have to have brick-and-mortar branches.
Traditional banks are already questioning the need for physical branches, as digital banks have become very competitive. One of the main reasons behind this is that they don’t have to establish physical branches and benefit in saving costs and being able to run in several locations easily.
The combination of the digitalization of banking, including current world happenings, has led many people to go as far as to question the need for physical bank branches altogether.
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- The Books
Some decades back, when bank records were yet to be digitized, ledgers had to be updated by hand. After opening hours, the banks would be closed to customers, though workers would be reviewing the current day’s banking records and ensuring that everything is as it should be.
This ensured that they often had adequate money in their accounts because if there were a huge number of outgoing payments, then this would mean that the bank would have to seek loans from other banks to keep running.
Ensuring that the books were corrected at the end of a working day was thus a very significant process to guarantee the bank’s smooth operation the next day.
