Over the past decade, the focus of the financial press has typically been on financial innovations such as cryptocurrencies and branchless digital-only banks. The latter has proven a surefire way for banks to acquire new customers fast, as evidenced by the likes of Marcus, Chime, and Apple’s new savings account. Yet the newsworthiness of neobanks and fintech more broadly has distracted onlookers from the reality that a substantial proportion of US consumers still make regular use of their provider’s branch network. They also have unfavorable opinions regarding the idea of banks without branches.

Chase branch strategy contrasts sharply with its peers

During JPMorgan Chase’s 2023 investor day Q&A, Wells Fargo analyst Mike Mayo queried the bank’s decision to open 650 new branches over the past six years – a move Mayo noted is in stark contrast to industry trends. While JPMorgan has ultimately closed more branches than it has opened over the last decade, it has shuttered branches at a much slower rate than the likes of Bank of America and Wells Fargo.

There is good reason to believe this strategy has worked to the bank’s advantage. In response to Mayo’s question, JPMorgan’s co-CEO of Consumer & Community Banking Marrianne Lake directly linked the bank’s branch strategy to its outperformance of competitors in terms of retail deposit market share. After examining consumer sentiment regarding branch banking, it becomes clear there is a solid grounding to this argument.

According to GlobalData’s 2022 Financial Services Consumer Survey, 58% of US consumers agreed with the statement “I do not want to use a bank that has no branches.” Only 20% of consumers disagreed. When looking at the channel usage patterns of both these groups the explanation for these responses becomes obvious.

Of the 58% who showed a strong preference for branch access, 72% reported using a branch at least once a month. By comparison, among the 20% that disagreed with the statement, monthly usage dropped to 44%. Overall, 42% of US consumers both make regular use of their bank’s branch network and are discomforted by the idea of a bank being unable to offer access to such a network.

US bank branch numbers peaked in 2009

However, despite the majority of US consumers strongly disliking the idea of banking without branch access, the prevailing trend over the past decade has been branch closures. According to the World Bank, the number of branches per capita in the US peaked in 2009 at 35.9 per 100,000 adults and has been on the decline ever since. By 2021 the figure had fallen to 28.3 per 100,000 adults – 21% lower than in 2009.

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Considering the scale of support for branch banking in the US, the downsizing of branch networks highlighted by this data has created the perfect environment for a provider to swoop in and capture disaffected consumers by moving against the prevailing trend.

Whether banks will want to seize on this customer acquisition opportunity is a separate question. After all, acquiring new customers will only be worthwhile if it draws in enough revenue to cover the cost of an expanded branch network. Regardless, the opportunity is there: a sizable proportion of US consumers want branch access, and at present these demands are being ignored by banking providers in the US.

Ciaran Yates is an analyst, Financial Services, GlobalData