Bank of America (BAC) said Monday it will open 165 branches by the end of 2026, the latest big US lender to announce more brick-and-mortar locations following a decade of industry retrenchment.
Rival JPMorgan Chase (JPM), which currently has the largest US bank branch network in the country, earlier this year pledged to open 500 new locations by 2027.
Large regional bank PNC Financial Services Group (PNC) also has announced plans to open 100 new locations while renovating more than 1,000 locations. Cincinnati-based Fifth Third Bank (FITB) is another regional lender expanding its footprint.
The reason some banks are making new bets on physical branches is that they now view the locations as ways to grab new wealth management and small-business customers without making acquisitions of rivals that might not pass muster with antitrust regulators, according to some industry observers.
The goal is to remake branches into places where customers go to get financial advice instead of just cashing checks.
Bank of America CEO Brian Moynihan told investors at a Barclays conference earlier this month that its branch investments are just one part of “cementing” customer relationships across its massive franchises.
“It’s one of the reasons why our fundamental growth rate outstrips the industry,” Moynihan said.
The new expansion for Bank of American is notable because of how dramatically it downsized its branch network following the 2007-2009 financial crisis, which forced the lender to cut costs around the country.
It has closed more than 1,000 branches since 2014, according to the company. Many of those were outside of the major US metropolitan areas as Bank of America focused on bigger population centers.
In June of last year, Bank of America said it was planning to expand into nine new markets. Those markets included Louisville, Ky., Birmingham, Ala., New Orleans, Boise, Idaho, Milwaukee, Wisc., and Omaha, Neb.
It’s on track to open 40 new locations this year. On Monday, the bank opened its branch in Louisville.
“We are thrilled to be expanding our presence in the Bluegrass state,” Felicia Lewis, an executive in Bank of America’s southeast division.
Since 2014, Bank of America has also invested $5 billion into its brick and mortar network partly to renovate and re-design more than 3,000 locations with the goal of making more space for customer meetings with financial advisors and other specialists.
Bank of America said 95% of its interactions with customers currently take place online but that customers have still placed nearly 10 million appointments at one of its financial centers, and 20% of those appointments have focused on consulting with a financial advisor about investing.
Rise and fall of the bank branch
There was a time when branch expansion was a key strategy for all banks with ambitions to operate beyond their hometowns.
The number of brick-and-mortar bank branches in the US steadily rose for seven decades starting in the 1940s, according to FDIC data, as regulators began allowing banks to build across state borders and reach for coast-to-coast networks.
Then the industry made a dramatic U-turn following the 2008 financial crisis, a retrenchment aided by the rise of online banking and widespread use of devices like Apple’s iPhone that allowed customers to deposit checks remotely.
Banks invested heavily in the technology needed to make the online banking experience easier as they pulled back on branches.
The utility of branches experienced another blow during the pandemic as lockdowns forced people to do all of their banking online.
More than 2,400 branches closed in 2021, the most since the 2008-2009 financial crisis.
But in 2023 US banks added more net new branches for the first time in a decade with 94, according to data from the Federal Deposit Insurance Corporation.
Banks still have a long way to go to make up for all the locations they shuttered in the last decade and half. The number of US branches was 69,684 at the end of 2023, down from 82,461 in 2012.
David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.
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