While there’s been an outsize (and bizarre) outcry about First National Bank’s decision to close somewhere between 25 and 40 branches in a round of “optimisation”, the country’s big four retail banks have been steadily cutting the number of branches for years.

Between them, the big four had 3 005 branches at the end of the 2011 financial year (December 2011 for all but FNB, which reports to end-June). At the end of 2015, this number had dropped to 2 862. That’s only a 5% fall, sure, but remember that this is against a backdrop of a growing (albeit stuttering) economy, an increase in client numbers (barring Barclays Africa Group’s Absa, which has only just started growing again), and strong retail bank earnings growth in the period.

Absa has trimmed more than 100 branches in the last five years, Standard Bank over 50, FNB has almost exactly the same number of branches as it did in 2011 and Nedbank has added 13. The other three, barring Absa, which has traditionally had a mammoth footprint, peaked in 2013/2014.

Measured from their respective peaks, Absa and Standard Bank are down by 11%, while FNB and Nedbank are down by 7%. At the end of 2015 (June 2015 for FNB), Absa retained the largest footprint with 784 branches, FNB had 723, Nedbank 708 and Standard Bank 647.

Those numbers are more similar than you’d first think (believe it or not, Capitec — not part of this analysis — is also in the ballpark with 691). Based on the operational reviews underway as well as the trends in the past two years, we’ll surely see the big four all slip to under 700 branches by 2017.

Traditional banks’ branches have high cost bases, which is one of the reasons why the companies have been pushing hard to shift transactions to electronic channels. Some have been more successful than others.

It’s not just the number of branches that’s declining. Retail floor space is shrinking, too

This is (obviously!) not a phenomenon unique to South Africa. The UK saw a 7% reduction in bank branches last year, to leave 8 400 retail locations. In the past decade, the number of branches has dropped by a quarter. It’s the same picture in markets like the US. Bank of America has closed a fifth of its branches in the past five years.

It’s not just the number of branches that’s declining. Retail floor space is shrinking, too. The big four don’t typically disclose their branch floor space year to year, but in April 2015 Nedbank reported a “reduction in retail floor space of 10 418sq m”. Separately, in 2014, it said it would look to cut 15% of floor space over the next five years as it rolled out its “bank of the future” branches.

I argued last week that branch cuts are a good thing, given that manual transactions are shifting to digital/automated channels very rapidly. While banks are incentivising customers to use these channels, most younger customers have no interest in using branches in the first place.

Banks don’t split out the number of staff working in branches versus elsewhere in retail banks, but you can bet that — over time — this number has decreased per branch (and because branch numbers as a whole are down, has declined in absolute terms too). By and large, banks are still adding staff, however.

Technology expenses, including staff costs, these are running well ahead of overall cost growth

IT spending continues to increase largely in line with overall operating expenses. But, if you look at technology expenses functionally, including staff costs, these are running well ahead of overall cost growth. For example, Standard Bank Group’s total IT function spend (including salaries) was R12,9bn in 2015, 11% higher than in 2014. And Barclays Africa Group spent R6,7bn on IT in 2015 (across all its operations), a 7% increase on the year prior.

This trend is only going to accelerate as transactions (especially payments) continue to be offloaded to Internet and mobile banking, with the continued push to native mobile apps, and the increased security they bring (they aren’t susceptible to phishing, for one).

Deposits have been moved to the banks’ ATM networks, as the penetration of (expensive but cheap at the price) automatic cash-accepting devices increases. But, don’t for a second think that the number of ATMs is growing at all. Only two of the big four are adding ATMs, and only one of those is doing so aggressively. More on this soon…