Protecting Consumers in the Digital Age: The Role of Bank Branches

Sustainable Development Goals

8. Decent Work and Economic Growth
16. Peace, Justice and Strong Institutions
10. Reduced Inequalities

Posted on 12 Nov 2025
Business and law

The digital economy has transformed how people access banking services, offering speed, convenience, and greater reach. However, these benefits come with significant privacy risks. Data protection laws like the European Union’s General Data Protection Regulation (GDPR) aim to regulate how businesses collect, store, and use consumer information, yet data breaches continue to outpace these measures, exposing consumers to fraud and identity theft. As digital systems become the new norm, the need to protect consumer data is more pressing than ever.

The challenge

The closure of bank branches has forced many to rely solely on digital services, leaving consumers vulnerable to data breaches and digital fraud. When local bank branches close, people do not just lose a place to bank—it changes how they live. They make fewer visits to physical stores, increase their online transactions, and spend more time on mobile apps. While digital engagement has become a necessity for economic activity, the privacy risks that come with it are often hidden and difficult to quantify.

In 2024 alone, consumers in the United States reported losses of US$12.5 billion to fraud —a 25% increase from the previous year. This raises questions about how to safeguard consumers in an increasingly digital world, especially those with limited digital literacy and who are most vulnerable.

The solution

Our research team focused on the closure of bank branches in the US and assessed their impact on consumer behavior. When bank branches shut down, consumers are pushed towards digital engagement leading to greater risks for data to leak, be stolen, or exploited. This is further exacerbated in communities where there are lower levels of digital literacy. The research found identity theft has surged in areas where bank branches have shut down, with an estimated US$1.4 billion in financial losses arising from identity theft due to branch closures in 2022, or 21.7% of all reported losses to consumer fraud in the same year. One potential solution the research identified is shared banking hubs, like those in the UK, where staff from various banks offer in-person services, particularly in communities with vulnerable populations. Such initiatives offer a layer of protection and help to rebuild trust. They help to offer a frontline defense against fraud through personalized security advice, a protection that otherwise disappears when bank branches close. These banking hubs help to ensure that the convenience of digital banking does not come at the cost of security and consumer fraud.

Outcome and impact

While the shift to digital transactions is inevitable, measures must be taken to protect vulnerable consumers. Forced digitalization arising from branch closures can amplify privacy risks by exposing consumers to identity theft. Collaboration between banks, governments, and regulators is essential to combat consumer fraud and ensure the benefits of digitalization are shared inclusively. Our research reveals how bank branches can serve as a vital social good in the digital age, by offering security and consumer protection. The human element of traditional banking often raises customer awareness about security practices and increases vigilance towards potential threats.

This research provides a framework for banks and policymakers to strike a balance between digital innovation and consumer protection—ensuring the shift to online services doesn’t come at the cost of privacy or security breaches.