Financial Desertification in Italy: Why Digital Banking Excludes the Most Vulnerable

In Italy, 40% of municipalities no longer have a bank branch, and in 216 municipalities no physical financial service exists at all. Over the same decade, digital banking adoption has tripled. This paper asks a simple but critical question: is digital banking replacing the branch, or only replacing it for some? We integrate three datasets — the full census of active bank branches (19,291 branches, 407 banks; GIAVA, Banca d'Italia, March 2026), the mapping of post offices (12,615 offices; Poste Italiane), and municipality-level data on demographics, income, and digital connectivity (ISTAT, 2023–2024) — to construct a four-category taxonomy of financial access across all 7,899 Italian municipalities. We show that municipalities without bank branches are systematically older (+3.2 pp in the 65+ population), poorer (−11% in average taxable income), and less connected (+6.2 pp broadband unavailability). These factors co-occur and reinforce each other, forming what we define as a *triple exclusion barrier*. The results challenge the dominant narrative of digital substitution: online banking does not replace physical access uniformly. It replaces it selectively — benefiting young, urban, and digitally connected populations, while generating financial exclusion in ageing, low-income, and poorly connected territories. The paper concludes that branch closures do not eliminate access costs, but transfer them to the most vulnerable users, raising critical implications for financial inclusion policy and territorial cohesion.