As we noted in our blog last year, JPMorgan Chase (JPMC) – the largest U.S. bank by several measures – continues to invest in physical locations as part of its winning strategy to serve customer segments, cross-sell multiple products to Chase households and source new deposits. In sync with JPMC, many banks and credit unions are investing heavily not only in their digital presence but also in brick-and-mortar expansion.
This ongoing trend to fund new branches is surely influenced by JPMC, which continues opening new branches: 110 in 2023, with plans for 500 more over the next three years while renovating an additional 1,700 locations.
Jennifer Roberts, JPMC’s CEO of Consumer Banking, confirmed the growth in a recent article, stating, “You’re going to see our network grow versus shrink over the next couple of years.”
At the recent May 2024 Investor Day, JPMC underscored that targeting 15% deposit share and extending the reach of its branches remain key strategies. As proof of concept for expanding the brick and mortar footprint, Roberts shared in a CNBC interview that “80 of the firm’s 220 basis points of deposit-share gain between 2019 and 2023 were from “branches less than a decade old. In other words, almost 40% of those deposit share gains can be linked to investments in new physical branches.”
BAC Franchise: Reacting to Customer Insights
Bank of America (BAC) continues to adjust its franchise using strategies similar to other big banks but with its own twist on implementation. Although 95% of BAC interactions occur digitally, the bank has found that customers still want in-person communications for many financial needs.
- Customers prefer to open new accounts in person.
- A surprising 80% of new checking accounts are opened in person at BAC financial centers.
- Customers prefer personal interaction for complex financial matters.
- Sixty-three percent of customers surveyed globally prefer in-person communications to solve specific and complicated problems.
Strategy: Branch Optimization
Once the leader in branch coverage across the U.S. footprint, Bank of America intends to stay competitive by entering new markets (and exiting others) while taking a fresh look at bolstering personal relationships. BAC is not following JPMC’s path towards have a branch presence in all 48 contiguous states—a goal JPMC achieved in 2022, according to its 2023 Annual Report.
At one point, BAC had 6,000 branches. That number is now around 3,800, a figure BAC considers to be in the stable range for its network, as noted by Dean Athanasia, BAC’s regional banking president, in a recent Financial Brand article. The bank recently announced plans to open more than 165 new retail financial centers by the end of 2026. The strategy referred to by bank executives as ‘branch optimization,” focuses on closing the bank’s less profitable branches so it can build out in hotter markets.
BAC’s investment in branch locations, especially in communities that are currently under-represented, is meant to deliver person-to-person interactions. A commitment to branch locations also helps foster a sense of community, providing jobs and increasing local engagement – similar to JPMC’s approach.
The goal is to achieve the No. 1 or No. 2 spot in market share throughout their network. Out of the top 30 markets in the U.S., there are currently six or seven where BAC, admittedly, has not achieved that goal in 2024.
Strategy: Renovating Financial Centers for Satisfaction and Growth
Earlier in 2024, BAC completed modernizing more than 3,000 financial centers across the country. The transformations aim to enhance the person-to-person branch experience by creating spaces for clients to talk with specialists, providing easier access to state-of-the-art technology and providing a consistent, modern experience aligned with the BAC brand.
The financial institution has turned to retail disruptors instead of traditional bank design firms. BAC brought in Sephora’s Rebekah Sigfrids as its first in-house designer for branches. Under her guidance, BAC opened a financial center in Williamsburg, Brooklyn, in a space suited for an art studio – bright, airy and retaining sculptures from the previous artist-tenant.
According to her LinkedIn page, Sigfrids brings skills and experience as a “creative retail designer who specializes in leading teams responsible for innovation, new concepts, design standards, and roll-out. Hands-on in the development of new concepts and equally passionate in establishing Creative/Design as a critical business function.”
Strategy: Amplifying a unique Brand Partnership
Bank of America is known for supporting the visual arts through corporate funding and “show your card” museum access across the U.S. The bank has a partnership with ArtLifting, which BAC leverages to showcase original artwork in more than 1,500 financial centers. Featured artists, sourced through ArtLifting, live with disabilities or housing insecurity. Not only does this initiative benefit deserving artists, but it also demonstrates inclusiveness and community support that plays well with empathetic younger cohorts.
Strategy: Frame digital transformation and the branch franchise as companions
While a focus on brick-and-mortar locations and in-person support may seem counterintuitive in an increasingly digital world, this industry shift reflects a growing commitment to deepen customer relationships—whether through high-tech or high-touch solutions.
“Once we get a presence in a market, digital sales double. Conversely, people who already bank digitally with Bank of America welcome the opportunity to visit local financial centers,” according to BAC’s Dean Athanasia.
Instead of adopting an all-or-nothing philosophy, financial institutions like Bank of America are strategically blending digital convenience with an in-person presence to improve the overall customer experience.
How’s it working for BAC?
In the past year, Bank of America reports clients made nearly 10 million appointments with specialists at financial centers.
- About 20% of appointments are meetings between clients and Financial Solutions Advisors to discuss investing, helping drive record-level assets in BAC’s Consumer Investments Business.
- Through its expanded Financial Centers and ATM networks, BAC now provides banking access to 246 million people across more than 200 markets – reaching more than 75% of the U.S. population.
- Approximately 30% of the BAC franchise is in low- and moderate-income communities.
BAC’s soaring investment relations engagement is by nature high touch, requiring personal relationships and trust based on face-to-face encounters. The bank has also found ways to extend positive aspects of its brand – support for the arts, inclusiveness, community-centricity – while building credibility and stability in new locations. Giving customers a choice and viewing digital and high-touch channels as comfortable companions appears to be a winning combination as branch optimization unfolds at Bank of America.
Anecdotally, BAC’s investment in branch design has positively impacted staff satisfaction. People prefer working in comfortable, aesthetically pleasing environments, and clearly, the new design’s “business function” approach supports their professional success by helping ensure customer satisfaction.