The Disappearing Cash Infrastructure: What Bank Branch Closures Mean for Germany
Cash remains indispensable in Germany—at least when you ask consumers. According to a representative forsa survey commissioned by the Bundesbank among 6,000 respondents, cash was still the most commonly used payment method in 2021 (no newer figures available). 58% of recorded transactions in 2021 were settled with cash, even though its use is declining. Compared to the previous study from 2017, the share of cash payments in the number of transactions has fallen by 16 percentage points over the past four years, reports the Bundesbank.
The Accelerating Decline of ATMs and Bank Branches
Against this backdrop, it's noteworthy that banks increasingly seem to have less appetite for cash. Savings banks (Sparkassen), the market leaders in retail banking, still have the most ATMs: but their number fell by 1,034 to 21,582 in 2021, as Bundesbank figures show. Cooperative banks (Volksbanken and Raiffeisenbanken) have reduced ATMs even more sharply: their number dropped by 1,800 to 15,520 in 2021 and 2022, as confirmed by the industry association BVR to Handelsblatt.
Private banks hold even fewer ATMs. The Cash Group, an alliance of Commerzbank, Deutsche Bank, Hypovereinsbank, and Postbank, had around 7,000 ATMs in 2022 according to test.de and has also significantly reduced the number. The Cashpool comprises a total of 2,800 ATMs from currently 35 banks, including Sparda-Banken as well as Santander, Targobank, Degussa, and BBBank. Overall, the Bundesbank counted just over 55,000 ATMs at the end of 2021—4,000 fewer than in 2018.
Case Study 1: Sparkasse Niederdorfelden Ends Cash Deposits
An absolute novelty is that a savings bank recently stopped allowing its customers to make cash deposits at all. This involves the Sparkasse Niederdorfelden near Frankfurt am Main, as reported by tagesschau.de. The savings bank will no longer accept banknotes or coins. The reason: "It is a branch with low staffing levels," quotes Tagesschau a spokesperson for the responsible Sparkasse Hanau. Therefore, there is no cash desk for deposits and withdrawals.
Niederdorfelden is a municipality with just under 3,600 inhabitants and is home to medium-sized pharmaceutical manufacturer Engelhard Arzneimittel, a company with around €120 million in annual revenue. The new situation is not only a problem for clubs that can no longer deposit smaller donations collected at events at the savings bank. Many seniors who avoid online banking must now undertake long journeys by bus and train to access cash, according to "Focus" after on-site research. Some even pass their bank card and PIN to neighbors to fetch money—a risky undertaking.
Case Study 2: Raiffeisenbank Hochtaunus Closes All But One Branch
While citizens in Niederdorfelden at least still have local contacts, the Raiffeisenbank Hochtaunus is going a step further. Although its total assets according to the 2022 annual report rose by 36% to €1.4 billion and its loan volume by nearly 25% to €1.0 billion, the institution is closing all branches except its headquarters, according to tagesschau.de. This would also mean ATMs and cash disappear. "We subsidized the operation of the branches for a long time; meanwhile, customer demand is so low that we decided last year to close the branches due to lack of demand," a spokesperson told tagesschau.de. The cash supply for their customers is nevertheless secured through the possibility of obtaining cash at "branches of Rewe, Penny, dm Drogerie, et cetera."
Bundesbank Warns of Risks to Cash Access
The Bundesbank is also concerned about Germans' cash supply. "The observed reduction of ATMs and bank counters carries the risk that the existing network of withdrawal points develops cracks," quotes "Handelsblatt" from the bank's monthly report in January. It is becoming increasingly difficult for citizens to access cash. The central bank points out that the option to withdraw money in supermarkets can complement but not replace cash supply. In 2021, 81% of cash withdrawals were made at ATMs, 11% at bank counters—but only 8% in supermarkets and gas stations.
Underlying Drivers: Costs, Competition, and Crime
High costs are not the only reason banks are reducing ATMs: according to a McKinsey study, German banks must spend around €2 billion annually to maintain cash and the necessary infrastructure. This puts them at a competitive disadvantage compared to direct banks and online banks. Crime is also increasingly troubling banks:
According to the Federal Criminal Police Office (BKA), there were a total of 660 physical attacks on ATMs in 2022, including 496 attempted explosions, in 399 cases with solid explosives. Another nearly 500 cases involved so-called skimming: ATMs are manipulated so that perpetrators spy on the access data of debit cards and withdraw cash with a copy of the card. Banks respond by guarding branches in high-crime regions—or severely restricting access to ATMs, for example, by not allowing withdrawals at night. In the event of repeated incidents, ATMs are removed.
Key Takeaways and Future Outlook
- Digital Divide Deepens: The reduction in physical cash infrastructure disproportionately affects older citizens, rural communities, and those less comfortable with digital banking, potentially exacerbating financial exclusion.
- Business Impact: Small businesses, clubs, and cash-intensive sectors face operational hurdles when local banks no longer handle cash deposits.
- Security Trade-Off: While reducing ATMs may lower banks' exposure to physical attacks, it shifts the security burden to alternative cash access points like supermarkets.
- Regulatory Scrutiny: The Bundesbank's warnings may eventually lead to regulatory interventions to ensure minimum levels of cash access, similar to discussions in other countries.
- Strategic Shift: Banks are clearly prioritizing digital channels and cost reduction, viewing cash as a legacy service with declining demand and high associated costs.
The trend is clear: Germany's once ubiquitous cash infrastructure is shrinking rapidly. While digital payments offer convenience, ensuring equitable access to cash remains a critical societal challenge, balancing efficiency, security, and inclusion.