Well, well, well, will our four major banks change tack now that American giants JPMorgan Chase and Bank of America are rediscovering branch banking—particularly in poorer areas of the country?
It’s a major about-face because, up until the end of 2022, JPMorgan, along with rivals like Wells Fargo, Citi, U.S. Bancorp, and others, had been busy closing branches across America for the past decade or more in the name of greater efficiency, lower costs, and the growing impact of online banking.
Yet JPMorgan threw that out the window by announcing in February of this year that it would open more than 500 new Chase branches and hire 3,500 employees over the next three years.
That plan is now underway, and CEO Jamie Dimon has been promoting the idea, revealing this week that around 100 of the new branches would be opened in lower socioeconomic regions (where poorer people live).
The banking behemoth already boasts the largest number of branches compared to its competitors in the U.S., so this change of heart is significant. Its rivals will likely follow suit, if only to ensure JPMorgan doesn’t get a head start in attracting more deposits and enhancing its image among consumers.
Bank of America has taken notice and is adding to its branch numbers. It had 3,845 branches at the end of last year—1,000 fewer than JPMorgan. However, Bank of America has announced plans to open 164 new branches by 2026 as it plays catch-up with its larger rival.
This shift also quietly acknowledges that there are parts of the U.S. that are underserved by the banking industry. In many cases, banks have closed branches in the name of cost-cutting, scaling back, and (let's not mention it) achieving bigger profits.
The same has happened in Australia, where large areas are now virtual banking deserts, with one or two branches covering thousands of square kilometers of sparsely populated country—complicated further by weak or nonexistent online service.
The trend accelerated from the pandemic in 2020 onward in both countries, as the number of people switching to online banking soared (understandably) and remained online (especially on mobile devices) when lockdowns eased and life returned to normal.
Around 20% of the 500 new Chase branches will be opened in low-income areas of the U.S., marking a notable about-face by this banking giant.
U.S. regulators and politicians say the spate of closures over the last five years has not only contributed to bank branch closures but has also disproportionately impacted poorer customers, particularly in Black, Asian, and rural communities—many of whom still prefer to bank in person.
A recent study from the Philadelphia Federal Reserve supports this notion, stating that areas of the U.S. that are predominantly Asian and Black saw the biggest declines—7.6% and 6.6%, respectively—in local bank offices between 2019 and 2023, compared to a 5.6% drop in the number of branches nationally during the same period.
What’s notable is the expansion of what Americans call "banking deserts," where no bank branches are present; the biggest growth occurred in majority-Black communities, where the lack of any physical bank presence rose by 10%.
These deserts not only affect individual consumers but also small and medium-sized businesses. There has also been a rise in crime, including thefts, assaults, and robberies.
Data from U.S. regulators show that the banks closing the most branches in the year ending June this year were Wells Fargo, PNC, and U.S. Bank—but not JPMorgan, which opened three new standalone branches to add to the 4,897 branches it had at the end of 2023.
The bank states that the new branches will retain a traditional look while also featuring areas for financial literacy workshops and small businesses.
When questioned about the plan to take this format national, JPMorgan CEO Jamie Dimon said this week, “If they didn't work, we wouldn't do them.”
