In the News: Chasing Chase
- Banks
- Branch Transformation
- Consulting
- Retail
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With so much being written over the years about the demise of the branch, especially in the wake of the pandemic and the rise of digital, it’s interesting to note the recently released article from The Financial Brand relating to the retail strategy revealed by Chase.
Among the click-bait worthy headlines such as digital first darlings, FinTech disruptors and industry pundits standing on their soap box eulogizing the branch and its prominence from a by-gone era, there is a level-headedness in analyzing what Chase is doing with their branch strategy over the past several years.
At LEVEL5, we work with community banks and credit unions each day developing and executing growth strategies and inevitably, these strategy sessions always hold discussions relating to the Big Banks – BofA, Chase, Wells Fargo and Citi.
There are two sides of the coin when watching what the Big Banks are doing – they are often (way) ahead of the curve when it comes to innovation, spend, resources and strategy. This can be a blessing and a curse. On one hand, they have the financial prowess and horse power to be a first mover. On the flip side, community banks and credit unions can sit and wait to see if those strategy work or now, and can extrapolate their own strategies thereafter.
When it comes to analyzing Chase’s retail branch strategy, there are some interesting lessons to be learned, particularly of note is their effort in “expanding their branch network.”
BANKING RELATIONSHIPS BEGIN AT THE BRANCH
Chase continues to innovate and offer a wide array of products, but the branch acts as an important anchor. Not only do most new relationships stem from the branch, but the branch purpose itself is morphing away from transactional and more toward advisory. This strategy is not only stated by Chase, but also recently corroborated by BAI in their recent “From branch to engagement center” article.
IT’S NOT ABOUT BRANCH REDUCTION, IT’S ABOUT BRANCH OPTIMIZATION
But it’s not just strategic lip service – the numbers support this as well. In 2017, Chase had approximately 5,150 branches across ~25 states, serving 61% of the population.
At the close of 2021, Chase’s retail branch strategy had ~4,800 branches, but covered the entirely of the lower 48 states, serving 79% of the population.
Don’t let the fewer number of total branches fool you you here – these were not out and out closures, they were consolidations, or branch optimization plans in effect, all the while, Chase was expanding, aggressively entering 300 new markets with 500 new branches, and saturating high value markets such as Boston, Philadelphia and D.C.
WHAT CAN YOU LEARN FROM THE CHASE BRANCH STRATEGY
Your FI is never going to be Chase. You’ll never outspend them, never spend as much on innovation, and never will offer as many products and services. You shouldn’t try to be them – but you sure can learn from them.
Regarding the branch, the lesson here is this: the branch is important – as important as it ever has been. It is your living billboard, an anchor in the community, and it drives new acquisitions.
The numbers game here when it comes to your branch network is not about how many, but how many in the right trade areas. Branches acts as an anchor in a given trade area, but that serviceable trade area’s geography may be bigger than what it was five years ago. Right sizing your branch network is key, but you need to optimize your branch network for the right amount of coverage, to serve your customers or members in and around where they live and work.
If the question of your branch network and the best path to optimization comes up a little too often in your strategy meetings, it’s time you reached out to LEVEL5. Our Strategy team analyzes branch networks and expansion geographies every day for community banks and credit unions across the country.