Bank of America (BAC) said Monday it will open 165 branches by the end of 2026, the first major U.S. financial institution to add brick-and-mortar stores after a decade of industry contraction. Become a modern company.
Rival JPMorgan Chase (JPM), which currently has the nation’s largest network of U.S. bank branches, pledged earlier this year to open 500 new stores by 2027.
PNC Financial Services Group (PNC), a major regional bank, also announced plans to open 100 new stores while renovating more than 1,000 stores. Cincinnati-based Fifth Third Bank (FITB) is another regional lender expanding its footprint.
Bank of America branch in New York City. (Photo by Gary Hershorn/Getty Images) (Gary Hershorn via Getty Images)
The reason some banks are making new bets on physical branches is that some industry insiders say they are making new bets on their physical branches, which could potentially pass antitrust regulators’ scrutiny. The company sees it as a way to acquire new wealth management and small business customers without having to buy a rival company.
The goal is to transform branches into places where customers go not only to cash checks but also to receive financial advice.
Read more: Online banking vs. traditional banking: which one is right for you?
Bank of America CEO Brian Moynihan told investors at a Barclays conference earlier this month that the branch investment would “solidify” relationships with customers across the large franchise. He said it was just part of the story.
“This is one of the reasons our underlying growth rate is outpacing the industry,” Moynihan said.
Brian Moynihan, CEO of Bank of America. Reuters/Elizabeth Franz (Reuters/Reuters)
Bank of America’s new expansion is notable after it significantly reduced its branch network after the 2007-2009 financial crisis forced banks to cut costs across the United States. .
The company says it has closed more than 1,000 branches since 2014. Bank of America focused on larger population centers, many of which were outside major U.S. metropolitan areas.
Last June, Bank of America announced plans to expand into nine new markets. These include Louisville, Kentucky, Birmingham, Alabama, New Orleans, Boise, Idaho, Milwaukee, Wisconsin, and Omaha, Nebraska.
The company plans to open 40 new stores this year. On Monday, the bank opened a branch in Louisville.
“We are excited to expand our presence in the Bluegrass State,” said Felicia Lewis, Bank of America’s Southeast division executive.
Since 2014, Bank of America has added 50 locations to its brick-and-mortar network as part of a renovation and redesign of more than 3,000 locations aimed at creating more space for customer meetings with financial advisors and other professionals. Investing billions of dollars.
Bank of America says that although 95% of its customer interactions now occur online, customers still make nearly 10 million reservations at one of its financial centers, 20% of which He said he is concentrating on consulting with financial advisors regarding investments.
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The rise and fall of bank branches
There was a time when branch expansion was a key strategy for any bank with ambitions to expand beyond its home base.
The number of brick-and-mortar bank branches in the U.S. has declined for 70 years since the 1940s, as regulators began allowing banks to set up shop across state lines and expand their networks across the country, according to data from the Federal Deposit Insurance Corporation. steadily increased. .
JPMorgan Chase Bank has a branch in Lower Manhattan. (Photo by Spencer Pratt/Getty Images) (Spencer Pratt via Getty Images)
Then, after the 2008 financial crisis, the industry made a dramatic U-turn. There was a setback with the rise of online banking and the proliferation of devices such as Apple’s iPhone, which allow customers to deposit checks remotely.
As banks retired their branches, they invested heavily in the technology needed to facilitate the online banking experience.
Branch utilities took a further hit during the pandemic as lockdowns forced people to do all their banking online.
More than 2,400 branches closed in 2021, the most since the 2008-2009 financial crisis.
But in 2023, U.S. banks added 94 net new branches for the first time in a decade, according to FDIC data.
Banks still have a long way to go to make up for all the stores they closed over the past decade and a half. The number of branches in the United States will be 69,684 at the end of 2023, down from 82,461 in 2012.
David Hollerith is a senior reporter at Yahoo Finance, covering banking, cryptocurrencies, and other financial areas.
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