BIRMINGHAM, Ala.—Contrary to a popular assumption that large banks are increasingly closing branches, a “counter-trend” of branch expansion is underway, according to a new report.
While there are 17% fewer branches in the nation overall than in the peak year of 2010, and many have “proclaimed the declining aggregate branch counts as presaging the imminent elimination of that channel, a counter trend began to emerge, gaining momentum over the past two years to where now many of the nation’s largest banks have announced specific plans for widespread branch expansion,” according to the Spring issue of Bancology, published by Bancography.
Why the Turnaround?
Why the turnaround? According to Bancography’s analysis, there are two key facts at work:
- First, “branch expansion never ceased; It abated. Even institutions that were in aggregate reducing branch counts still continue to add branches incrementally, to address emerging growth corridors or franchise gaps within certain geographic regions and or demographic segments.”
- Second, “net branch counts across the industry continue to decline, so the expansion initiatives in some markets are not offsetting contractions in other markets.”
‘Perhaps Surprising’
The Bancography report acknowledged that given the rise of digital channels and the pace of branch closures of recent years, “the expansion commitments are notable and perhaps surprising.”
Returning to the question of why, Bancography said there are several factors driving the expansion initiatives. For example, for banks with nationwide aspirations there are certain “got-to-be-in” markets, including all the top X metropolitan statistical areas by population.
For the full report, go here.
