Banks’ Physical Footprint and Financial Technology Adoption

Working Paper 888

Do physical bank branches moderate the diffusion of digital payment technologies? Does the diffusion of an efficient and inclusive digital payment technology allow fintechs to increase their presence? To answer these questions, we leverage bank heists that use explosives and render branches temporarily inoperable. We provide evidence that these attacks are not associated with local crime trends and that they deplete the branches’ cash inventory. Moreover, we show that they lead to persistent increases in digital payments usage and that a smaller cash dependence boosts digital institutions’ growth not only in payments but also in credit markets.