Trimming Branches: Banking Companies Increase Focus on Digital Banking

A new report from JLL shows that while the number of bank branch locations is falling, technology isn't ending the need for in-person banking help.

There’s an ongoing revolution in the banking industry. An increasing number of branches are being vacated, some new smaller ones are opening, and there’s been an increased focus on digital banking, according to a new report from real estate services company JLL.

While the digital shift is nowhere near complete, JLL said banking companies are seeking the best ways to serve their customers.

Financial Brand, a leading website for senior-level banking executives, recently reported that 90 percent of consumers are comfortable with fintech options for real-time payments and a variety of mobile wallets. But they also said 93 percent of consumers only “trust” big banks, community banks, and credit unions with their financial data.


Many transactions can be done via mobile device or ATM. [Photo: iStock]

One group of local organizers, however, has filed paperwork for the first de novo bank in North Texas since 2009. A de novo bank is a new institution founded from the ground up, not through a merger of equals or acquisition. Organizers said that Farmers Branch-based Tyme Bank could open in the third quarter.

Personal engagement still counts

Traditional banks are challenged to keep their customers, JLL said, and must optimize branch availability to meet the physical demand for convenience. Banks need digital solutions to allow customers to bank anywhere at anytime, and they should utilize user-friendly apps to make that easy and seamless.

Still, personal engagement is important to answer financial questions that customers might have.

JLL says banks are decommissioning branches at a record pace. And no slowdown is in sight for those consolidations, noting that in fiscal year 2019 some 1,700 branches closed. At a 1.9 percent decline, JLL said that number is consistent with its forecast of 2 percent annual net closures.

Peaking in 2009 at nearly 100,000 branches, the total number has declined by more than 13,200 branches over a decade. JLL said it doesn’t expect that pace to change over the next two years as the banking industry works to integrate physical branches with digital platforms and to define how to best serve rapidly shifting customer expectations.

Financial Brand said at that rate of decline, over the most recent 10 years, at about 2 percent a year, it would take more than a hundred years before there were no bank branches in the U.S.

That analysis does not include credit union branches though, which totaled 21,337 as of June 2019.

The total number of bank branches has fallen in North Texas

Since 2010 in Dallas-Fort Worth, the number of bank branches has fallen from 1,800 to 1,600, a net decline of 11 percent. Banking companies continue to eject branches with the net count in Dallas-Fort Worth declining by 44 locations, or 2.7 percent.

JLL said that is slightly faster than the nation as a whole.

And, the number of closures was offset by the 42 new locations that opened across the region in established commercial and/or residential development hotspots.

JLL noted that a new Chase Bank opened in a downtown Dallas mixed-use project, next to Klyde Warren Park, which reflects JPMorgan Chase’s current branch philosophy. The new branch is about 4,500 square feet in a modern, open format, with three to four private offices, a couple booth-style stations for banking advisers, and a general open area.

It has no tellers, which JLL said are a major cost and are often underutilized. All transactions can be accommodated by three ATMs.

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