Bucking the global trend of closing branches, some banks continue to expand their in-person presence

The news: JPMorgan plans to renovate branches it acquired after First Republic collapsed earlier this year.

• As many banks around the globe continue to shut branches to save costs, JPMorgan hopes this contrarian move will help it secure greater market share.

The trend: As FIs seek to focus on online and mobile banking while cutting staff and real estate costs, branch closures have accelerated around the globe.

• In less than 14 years, US FIs have closed over 20,000 brick-and-mortar branches.
• In response to this trend, UK legislators aim to guarantee that no person or business will be more than three miles from withdrawal/deposit facilities with new legislation.

Some FIs view these closures as a chance to differentiate themselves from competitors.

• Nationwide ends its latest commercial with the line, “Unlike the big banks, we’re not closing our branches.” 

JPMorgan’s strategy: The largest bank in the world saw a similar opportunity and took it.

• After preserving many relationships in the region, including many key employees, JPMorgan has set into motion a strategic plan to establish itself as the preferred bank for Silicon Valley.
• The CEO of Chase Consumer Banking Jennifer Roberts said that 75% of the bank’s depositors visit a branch at least once every 12 months, so the bank plans to continue to cater to their needs.
• After it overhauls them, JPMorgan aims to keep 63 of the 84 branches it acquired from First Republic active. 

Bank of America also has a branch strategy: It opened up 55 branches in 34 new markets this year, down slightly from 58 new branches last year.

• The bank cited “deposit gathering” as the key reason behind the expansion, likely referencing research that its depositors also value trips to the branch.
• It has targeted the following markets for expansion: Birmingham and Huntsville, Alabama; Boise, Idaho; Dayton, Ohio; Louisville, Kentucky; Madison and Milwaukee, Wisconsin; New Orleans, Louisiana; and Omaha, Nebraska.

Who else stands to benefit from this move? Vulnerable consumers will also be better able to participate in the banking experience.

• According to a recent PYMNTS and Payment Systems for Credit Unions (PSCU) survey, over half of subprime (credit scores below 600) consumers in the US prioritize close proximity of an ATM over any other factor when choosing where to bank.
• Another survey conducted by Which?, a consumer choice publication, found that 52% of UK consumers with disabilities felt bank closures have affected their ability to access vital banking services.

Key takeaways: These physical footprint expansion strategies and their competitive edge in AI and the talent wars are part of these FIs’ plays to crowd out smaller competitors in the coming year.

• This doesn’t mean community and regional banks have nowhere to go. Smaller FIs still have strongholds in key markets, but must focus on meeting their needs to drive up customer loyalty.