More Banks Are Opening Branches Since The Turn Of The Century

(CTN News) – In 2023, American banks will open more net bank branches than in the previous decade. So far in 2024, the company has not backed off its bet on brick-and-mortar locations.

The Federal Deposit Insurance Corporation released new data this week that shows banks added 94 net new branches across the country last year. The number of new openings outweighed the number of closings for the first time since 2012.

In the aftermath of the 2008 financial crisis, many banks were forced to reduce their footprints and cut costs, while relying increasingly on digital banking to connect with their customers as a result of the consolidation of physical locations across the country.

In order to make up for all of the locations the banks have closed, they still have a long way to go. In 2012, there were 82,461 branches in the US; by the end of 2023, there would be 69,684 branches, down from 82,684 in 2012.

There have been a number of large banks that have announced plans to add back more employees this year.

A few of these companies are the Pittsburgh lender PNC Financial Services Group (PNC), Cincinnati lender Fifth Third Bancorp (FITB), as well as the industry giant JPMorgan Chase (JPM).

The reason some banks are making new bets on physical branches is that they view the physical locations as a way to capture new wealth management and small business customers without making acquisitions of rivals that might not pass muster with antitrust regulators, according to industry observers.

Previously, Eric Rosengren, president of the Federal Reserve Bank of Boston, stated that large banks have been restricted from acquiring domestic companies. As an alternative, they have been encouraged to open new branches in order to expand into new domestic markets.

Many banks are seeking alternative revenue sources beyond lending, and wealth management is one of them. Such services require a degree of personal contact that can only be provided by a branch, he noted.

There is no doubt that the recent turnaround has been influenced by the expansion of the largest bank in the United States, JPMorgan Chase. This year the company announced plans to open 500 new branches over the next three years, while renovating another 1,700.

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