Maybe those rumors about the demise of bank branches are being greatly exaggerated, after all.
While some big banks are pulling the plug on their physical locations as more customers go digital, a couple of major players are bucking the trend and getting ready to open hundreds of new branches over the next four to five years.
Bank of America is the latest to buck the bank closing trend
There’s no denying that 2017 was not a kind year to the U.S. bank branch.
According to the Wall Street Journal, more than 1,700 branches were shuttered over a 12-month period that ended in June 2017. Worse yet, federal data suggested that the closures continued into the second half of 2017 as well.
But now it looks like some banks are turning over a new leaf in 2018. Bank of America now says it plans to open more than 500 new branches from coast to coast over the next four years.
CNBC reports that Bank of America will move into a trio of Ohio cities: Cincinnati, Cleveland and Columbus. That move will complement the bank's recent expansion into Denver, Minneapolis and Indianapolis. And Pittsburgh is also being eyed as a new potential market.
In addition to new branches, Bank of America also plans to give a facelift to more than 1,500 existing locations with new technology, furnishings and layouts. Meanwhile, the bank says it will hire more than 5,400 workers as it expands its physical footprint.
Interestingly, it turns out Bank of America is far from the only big bank planning more branches.
You can also count Chase among the other "giant monster mega-banks" (GMMBs) — as money expert Clark Howard calls them — that's investing in more physical locations.
Chase is the nation’s largest bank by deposits and assets, but it lags behind in physical presence. It only serves 23 states and is notably absent from key markets like Boston and Washington, D.C.
Now, Chase is banking on profits from the new tax law to boost its bottom line as it seeks to expand into 20 new markets over the next five years. The bank recently announced plans to open 400 new branches and bring 4,000 new employees onto the payroll.
So…are bank branches coming or are they going?
Sometimes it seems like the GMMBs announce they’re closing branches in one breath and then they turn around and open branches by the hundreds just a little while later!
Here’s one possible explanation of this schizophrenic approach to retail banking…
We all know banks are always looking to cut costs in order to maximize profits for their shareholders, right? So from that perspective, it’s a no-brainer to close under-performing branches when more and more people do their banking on their phone, at a computer or at ATMs.
Yet as we said before, the news about the death of the U.S. bank branch has been over-hyped. The reality is that if you want to be a happier bank customer, you should try visiting a branch regularly — as counter-intuitive as that may sound!
Because that's the reality of the empirical evidence presented by J.D. Power in its 2017 U.S. Retail Banking Satisfaction Study.
“Overall satisfaction is higher among customers who use both the branch and mobile banking,” said Jim Miller, senior director of banking at J.D. Power in announcing the study’s results.
“Banks can’t choose between the two channels; rather, they must focus on how the two work together.”
About 71% of the bank customers J.D. Power surveyed reported visiting a branch an average of 14 times over the last 12 months. And this isn’t an age thing, either: Millennials said they visited a branch on average 11 times in the past year!
That said, Clark Howard has long banged a drum to rally people away from the GMMBs and toward credit unions or small local community banks. As he’s long said, “It’s not a question of if, but when you’ll get ripped off by your big bank.”
So with that in mind, consider looking at any of our nation's many small local banks, regional banks and especially credit unions. You can visit ASmarterChoice.org to find a credit union near you.