Banks are ‘branching’ out again

If you were asked ‘What happened last year for the first time in over a decade?’, few would correctly identify that banks added more physical branches than they closed in the US. Banks added a net of 94 new branches in 2023, and Yahoo Finance has a useful breakdown of some key movers.

PNC Bank is investing $1 billion to add 100 locations and renovate around 1,200 branches by 2028. JP Morgan Chase plans to add over 500 branches in the next three years. Larger banks are in large part fueling the increase in new branch openings – those with greater than $300 million in assets have driven 13% branch growth since 2001.

Factors ranging from the 2008 financial crisis to the rapid digitalization of traditional banking services led to a 15% reduction in the overall number of bank branches in the US from 2012 to last year. It is fair to assume that financial institutions, particularly larger regional and national banks, are now taking more proactive action to realign their physical footprint with market demand. A study last year from Accenture seems to support this strategy – among other findings, more than 6 out of every 10 consumers surveyed indicated that they turn to bank branches for assistance in solving complicated financial challenges.

Quantifying the factors that impact branch performance is a complex undertaking; dynamics ranging from estimating business and consumer demand for loans and deposits to assessing the impact of competing banks and credit unions must be accounted for. Site and situational characteristics are critical data points that must be evaluated when making site selection decisions.

While it remains to be seen whether banks and credit unions will continue to lean into physical retail long-term, the near-term outlook appears, for the first time in some time, to be bright.

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