While most banks are scrambling to close significant numbers of branches in an effort to cut operating costs, Bank of America has decided to open hundreds of new branches. While there has been much emphasis upon digital banking in recent years, this move underlines the continuing relevance of a physical presence.

Over the next four years, Bank of America plans to open more than 500 new branches across the US, including its first ever in Ohio. Given that Bank of America has closed more than 600 branches over the last four years, this indicates a dynamic strategy, with the bank’s branch network in a state of flux.

As part of its branch renewal program, Bank of America will take on 5,400 new employees and refurbish 1,500 existing branches with a view to improving its provision of advice and guidance.

On the digital front, it has also confirmed that Erica, its AI-driven banking chatbot, will finally go live in March 2018, and will enable mortgage applications to be completed in-app from April 2018.

Bank of America’s strategy of enhancing its branch network alongside its digital proposition recognises that, for many consumers, face-to-face contact is still important, despite all the hype about digital.

This is particularly true when initiating new relationships, where branches remain a hugely important customer acquisition channel: GlobalData’s 2017 Retail Banking Insight survey found that 73% of US consumers who opened a checking account during 2015–17 used a branch as their main application channel.

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Contrary to expectations, it is younger consumers who are the heaviest users of branches, with our research finding that 37% of US consumers aged 18–34 claim to use a branch at least once a week, compared to 27% of those aged 45+.

This rather undermines the notion that millennials always prefer digital channels, and suggests that they want the reassurance of speaking to experts where they lack confidence or knowledge, for example when dealing with their finances.

This offers a solution to a problem that many banks are grappling with: knowing that branches remain vital for customer acquisition, but mindful that they are used increasingly less often once a relationship has been initiated, how can they maximize utilization rates?

The answer is for banks to repurpose their branches. With consumers increasingly using digital channels for routine transactions, branches need to cater for the more involved interactions, such as financial planning and arranging more complex products.

Branch networks are already in a process of transformation – in the future there will be significantly fewer branches than today, but those that remain will be better equipped and better staffed than ever before, and will be well-placed to meet the complex financial needs of today’s consumers.