JPMorgan Chase & Co. plans to open 50 new branches in Philadelphia over the next five years. Some might consider that decision crazy in a world where millennial and Gen Z consumers do much of their banking online or through mobile apps. But those naysayers are buying into several misconceptions about retail banking.
The days of in-person banking are far from over, even for millennials and Gen Z. A million people visit a branch every day, JPMorgan Chase CEO Jamie Dimon says. Even the average millennial visits a branch three times per quarter, he adds. “We’re trying to serve clients the way they want to be served.
Why do brick-and-mortar branches have such staying power despite growing appetites for digital and mobile banking? Here are a number of reasons why retail banking isn’t going anywhere.
Why physical bank branches still matter
Banking is built on trust. Historically, banks made an architectural statement of strength, security, and longevity. Today, the brick-and-mortar presence maintains a sense of security that an online-only bank just can’t compare to. One recent survey found that “half of U.S. customers feel that online-only banks are ‘less legitimate’ than those with branches.”
Of course, certain banking services still require a customer to take advantage of ATMs, notary services, and other transactions where authentication requires the customer to be physically present at the bank.
Beyond that, consumers simply prefer to go into a branch to complete various banking transactions rather than using apps or even call centers. In a survey by PwC, 59 percent said they’d prefer to apply for a new loan in a branch. Some 58 percent of respondents prefer a branch when applying for a new checking or savings account. Applying for a new brokerage or investment account (43 percent) and using financial advisory services (37 percent) were other times when consumers prefer a brick-and-mortar bank.
More than 60 percent of traditional bank primary customers say it’s important to have branches in close proximity; two-thirds of customers visit a branch four times per quarter.
Not your parents’ bank branch
While physical branches still play a role for many consumers, they might not stick to the traditional size and functions as they evolve to better suit consumers’ needs.
When JPMorgan Chase opens its 50 new branches, Dimon says the type of branch is going to change. These new branches will likely be smaller and focus more on providing advice to customers. The type of employee will change as well, with more mortgage loan officers, small business loan officers, and financial advisors.
Chase will also offer educational tools such as You Invest to teach people how to handle retirement accounts and other financial matters.
The economic impact of JPMorgan Chase in Philadelphia
The construction of the new branches will have a positive ripple effect within the community, according to Thasunda Duckett, CEO of Chase Consumer Banking. “When we build a branch, we lift the whole community around it – contractors to build the branches, cafes and other small businesses to support the customer traffic.”
John McGinley, Managing Director and Head of Retail Distribution Network for JPMorgan Chase, said that Philadelphia’s branches will be unique because of the layout of the area. JPMorgan Chase has hand-selected locations that fit the community and neighborhood feel of the city.
Not to mention the $3 billion JPMorgan Chase will invest for mortgage and small business lending in the Philadelphia region over the next five years. The JPMorgan Chase Foundation has also committed $5 million to “revitalize the Kensington Avenue commercial corridor.”
With more than a million credit card, home loan, and other consumer clients, plus 30,000 business clients in the Philadelphia area, the investment represents a concerted effort to better serve existing customers and grow its customer base.
At Metro Commercial, we are proud to represent JPMorgan Chase in Philadelphia, South Jersey, and Delaware as a part of the bank’s branch and ATM expansion program.
The future of retail banking
Over the next five to ten years, retail banking will continue to play a major role for consumers. As with many retail operations, customers have figured out how they need banks to serve them throughout their entire lives. There are times when they’ll need to be present to complete a transaction; other times, online or mobile banking is more convenient and efficient.
But until there’s a trustworthy technology that can replace human presence for identification, deliver advice and guidance as well as a face-to-face conversation, and fulfill consumers’ in-person banking needs, brick-and-mortar banks are here to stay.