The demise of bank branches?

In August 2009, Bank of America signaled that it would be reducing its branch network by up to 10%.  Some industry commentators took this to be indicative of the longer-term demise of the branch channel.  These analysts pointed to branch costs, as well as the increased usage of online banking and related services.  Most leading U.S. banks did reduce branch numbers in 3Q09.  However, many of these banks acquired other banks over the past year, and the reduction in branch numbers comes from the elimination of overlapping branches.

Going forward, banks may well continue to shave branch numbers in order to control costs and reduce branch density.  However, we do not envisage the demise of the branch channel.  What we are seeing is a re-evaluation of the role of the branch, given that online banking, online bill payment and mobile banks are not accounting for a growing share of day-to-day banking transactions.  In the future, branch activities will be more focused on complex interactions, such as lending, marketing of new products and services, the provision of financial advice and general relationship development.

The following are branch counts for leading banks in 3Q09 (with changes from 2Q09 in parentheses)

  • Wells Fargo: 6,653 (down 15)
  • Bank of America: 6,008 (down 101)
  • Chase: 5,126 (down 77)
  • PNC: 2,553 (down 53)
  • Regions (down 4)
  • BB&T: 1,859 (up 354, due to acquisition of Colonial Bank)
  • SunTrust: 1,690 (down 2)
  • Fifth Third: 1,306 (no change)
  • Citi Retail Banking North America: 1,051 (up 21)
  • KeyBank: 1,003 (up 10)
  • Huntington: 610 (no change)
  • Comerica: 444 (up 3)