Banks Trim Branch Networks, but See Branches as Vital in Entering New Markets

Recent data shows that while banks continue to cut overall branch numbers, they are also deploying their network across a broader geographic base. These trends are in large part due to digital channels now dominating for everyday banking transactions. As a result, banks are maintaining a less dense network of branches in existing markets; and they are opening de novo branches in expansion markets.

The following table shows branch numbers for some leading U.S. banks at the end of the first quarter of 2023, as well as net changes from 1Q22 and 1Q18.

Most banks have closed branches steadily in recent years. Wells Fargo closed 180 branches between 1Q22 and 1Q23,and 1,280 branches over the past five years (representing a 22% decline). U.S. Bank, PNC, Huntington Bank, Santander Bank and First Horizon have also cut their branch networks by at least 20% over the past five years.

Banks have indicated that they will continue to downsize their branch networks, but this does not mean that we are witnessing the extinction of the branch channel. Surveys show that consumers continue to value branches: in the J.D. Power 2023 U.S. Retail Banking Satisfaction Study, 38% of customers describe branches as essential. And banks see branches as a key channel for:

Branding and marketing
Customer acquisition and onboarding
Customer service
Local community engagement
Showcasing new products and technologies
Expert advice and support

What’s more, branches are critical beachheads for establishing a presence in new markets.

At its 2023 Investor Day, JPMorgan Chase reported that though it closed 22% of the branches in its legacy network between 2017 and 2022, 15% of its current branches were opened during the same period in new locations. It now has branches in each of the 48 continental states and 60% of the U.S. population is within a 10-minute drive of a branch (up from 50% in 2017. JPMorgan Chase is planning to grow its population coverage to 70% in the coming years.
Bank of America recently announced plans to expand its retail banking network into seven new markets, even as it cuts its overall branch count. The bank currently has branches in 83 of the top 100 markets and plans to expand that number to 90 by the end of 2025.
TD Bank announced plans to open 150 new branches by 2027, as it seeks to grow market share in south Florida, Atlanta and South Carolina.

In summary, trends in digital and branch channel usage create opportunities for traditional bricks-and-mortar banks to reduce overall branch numbers while expanding their reach into new markets through de novo flagship branches.

Leading U.S. Banks Boosted Marketing Spend in 2022

An EMI Strategic Marketing analysis of 30 leading U.S. banks found strong overall growth in marketing budgets for the second consecutive year. Following an 18% decline in 2020 in the midst of the COVID-19 pandemic, these leading banks have grown their marketing budgets by 53% over the past two years.

Five banks – American Express, Capital One, JPMorgan Chase, Citi and Bank of America – each spent more than $1 billion in advertising and marketing in 2022. Discover was just below this threshold.

These banks’ average marketing ratio (marketing spend as a percentage of net revenues) rose by 34 basis points (bps) to 3.65% in 2022.

There is significant variation in bank marketing ratios between – and within – different banking categories.

Card-centric banks like American Express and Discover tend to have high marketing ratios as they have national reach but no branch networks.
Direct banks also have relatively high marketing ratios as they lack branch networks. Newer challenger banks are also investing significantly in marketing to build customers, deposits and assets.
More ‘traditional’ bricks-and-mortar banks typically have marketing ratios in the 1-3% range, although even in these categories we see significant variation as individual banks pursued different marketing objectives. Regional banks like Cadence Bank (+285% to $42 million) and BMO (+23% to $128 million) ramped up budgets in 2022 to promote brand overhauls. Super regional banks like Citizens (+38% to $184 million) and M&T Bank (+41% to $91 million) significantly grew their marketing spend to support entry into new markets following recent acquisitions.

Going into 2023, the projected trajectory for bank marketing spend is less clear, with rising inflation and slowing economic growth forcing banks to look for ways to reduce expenses. In addition, because they have grown budgets in recent years, some leading banks may decide to pause or even scale back their marketing budgets in 2023. However, many have stated their commitment to maintaining or even growing their marketing investment to support specific business strategies.

Discover expects double-digit growth in marketing spend as it pursues growth opportunities in credit card and deposits. It also claims that it continues to see strong returns on its investments.
Fifth Third plans to increase marketing spend in the mid-single digits in 2023 as it targets customer acquisition in the Southeast.
Axos Bank is maintaining higher spend levels as it seeks to grow deposits in an increasing competitive market.

“Nice” Email Marketers Finish Last: The Arguments Against Limiting Your Email Volume

How often has a high-performing salesperson been criticized for making too many prospecting calls? Most likely: almost never.

More importantly, how often has that same high-performing salesperson criticized themselves for too much prospecting and vowed to change their ways? That one is easy: NEVER.

And yet at EMI, we constantly talk to marketers who insist that they must self-regulate email deployment volume to avoid turning customers off, even if the emails are performing well. The marketers usually make one of the following arguments to justify this self-imposed limitation:

“I hate getting too many emails.” This is about marketers projecting their own sensitivity and distaste for receiving too many emails onto customers.
“We need to manage our long-term customer relationships.” This is about marketers wanting to be viewed as strategic players, not tactical executors.

Unfortunately, neither of these arguments holds up to scrutiny, leaving marketers to impair the role of emails – like the sales unicorn imagined at the beginning of this article – by curtailing their activity despite strong results. So here are five counter arguments against the case for establishing email volume limits:

It’s not based on data. It’s true that some email marketers make a volume limiting decision based on data analysis, though in our experience that is a rare breed – especially in B2B. The chart below shows a sample of the data we’ve collected in our work with clients. As you can see from the chart, it’s almost always the case that when you send more emails, you get more people to click. Setting aside the two arguments above, it should make intuitive sense that more emails delivered means more chances to see your emails and decide to click…and this chart supports that intuition.

Your customers don’t actually pay as much attention to your emails as you do. You strategize, design, write, code and test every email that you send and are therefore intimately acquainted with and invested in each one. Your customers? Not so much. Most probably couldn’t accurately state how many emails you send because they get so many emails from so many companies that no one company stands out.
People are busy and your emails aren’t really that important to them. You need to believe that every email you send is fantastic – well-written, solution-oriented, delivering valuable insights – and hopefully most are. But just because an email is worthy of attention doesn’t mean it will always get it, even from individuals who might have an interest. Your email is competing with the 1,000 other emails in their inbox, some from managers or customers about urgent business issues that will always take priority. In other words, an Open Rate of less than 100% is not a condemnation of your email quality or your email volume.
Most of the time, it’s a question of quality, not quantity. Know when it’s annoying to get a lot of emails? It’s when the emails are a waste of the reader’s time: light on anything helpful or useful or interesting. If you’re sending out good content in well-constructed emails, there’s not much for your audience to complain about.
You don’t get rewarded for not sending emails. Just like salespeople would never close a deal by NOT reaching out to a prospect, marketers will never drive awareness, interest or decisions by NOT sending emails. Nor will prospects remember that you haven’t sent them as many emails (see points 2 and 3 above) as your competitors. Mostly what they’ll do is not think about you or the solutions you offer.

The arguments supporting a self-imposed volume limit are seductive and, at their core, have good intentions – treat customers the way you’d want to be treated, respect their time and attention, only communicate when you have something important to say. What volume limits don’t recognize is that no company communicates with customers in a vacuum: every minute of every day marketers are competing for the attention of customers and prospects along with hundreds or thousands of other companies and internal demands. While it may seem like limiting email volume is a noble decision that reflects a customer-first attitude, the harsh reality is that when it comes to email marketing, nice marketers finish last.