Where are bank branches headed?

Bank branches overall are declining across the U.S. After reaching a high of around 80,000 in 2010, they have since fallen to just over 71,000 at the end of 2022 and they now sit at just below 70,000 at the end of 2023, according to a report by Statista. This trend is continuing with some banks, such as Truist, which plans to close 72 locations in six states to save $750 million in costs, according to a report by AL.com

Declining trends

This trend may also be exasperated by recent regulations such as a proposal by the Federal Reserve that would require banks to raise capital requirements by 16% as part of an effort to prevent bank collapses, like what happened in spring 2023 when Silicon Valley Bank, Signature Bank and First Republic Bank all collapsed.

"Banks continue to consolidate branch networks across the United States. According to American Banker, the number of branches has declined for 14 straight years. This is a part of banks' efforts to reinvest into the type of capabilities that consumers are looking for, whether that's online or mobile banking, or by opening new retail locations in high-demand markets," Steve Turley, head of consumer distribution strategy, planning and innovation at TD Bank, said in an email interview.

Expansion

However, this trend doesn't tell the entire story as not every bank is shuttering branches. In fact, Bank of America released a plan to expand its branch network into nine markets over the next four years, and it opened 58 branches in 2023.

In addition, Turley said that TD Bank also plans to expand its branch presence.

"In 2023, TD reinvested in its store network by renovating 52 stores and opening 18 new locations across our Maine-to-Florida footprint. We opened our first five retail locations in Charlotte, North Carolina, including three in low-to-moderate income areas. We had our sights set on expansion into Charlotte for some time and continue to see opportunity to deliver an advice-based approach to banking focused on deeper relationships with customers," he said.

Design

Part of this effort involves changing the design of the bank branch to provide better services to customers, such as by replacing "traditional fixtures with open, flexible spaces to allow our colleagues to easily assist and personally connect with customers."

Turley also pointed out that some locations, the layouts would have spaces for TD Wealth Financial Advisors to talk with clients.

Self-service

Bank branches are not only changing their designs, they are also integrating more digital and self-service elements to better serve clients.

As part of Bank of America's new branches, they are utilizing iPads more to check-in clients and perform basic banking tasks.

"We have iPads where we can have conversations for quick transactions. They can go in and out or set up an appointment," Amber LeGrett, SVP of business strategies and initiatives at Bank of America, said during a session at last year's Bank Customer Experience Summit.

Omnichannel

Bank branches are also helping clients get comfortable utilizing all of the bank's channels of communication, and in turn they can pick which channel works best for their needs.

"We recently redesigned our mobile app to provide a smooth experience for customers, and our store colleagues are helping customers get comfortable with the changes or download the TD mobile app for the first time," Turley said. "Our store colleagues also assist customers in providing information about self-service features via our digital, ATM or contact center channels, so they can decide on their preferred channel to bank with us."

Digital signage

Another way bank branches are changing is by integrating more digital signage to inform customers about specific services and products.

"Digital signage technology has become more sophisticated and allows for more customization. Through our Next Generation Store Program, TD is upgrading our digital screens inside and outside stores to inform customers of our products and services that reflect the financial needs of personal and small business banking customers in specific communities across our footprint," Turley said. "We're also launching new menu boards – replacing most analog posters and kiosks – to help welcome customers into our stores, celebrate the community and share with them all TD has to offer."

Banks can also use these displays to communicate about their personal values and brand, which can appeal to a broader audience, especially Gen Z.

"To engage more effectively, particularly with Gen Z customers, banks should focus on showcasing their unique brand voice and value-driven purpose through their digital signage. This approach not only differentiates them from competitors but also resonates with Gen Z's preference for brands with clear values and identities," Sam Vise, CEO of Optimum Retailing said in an email interview. "Finally, personalizing the content based on local demographics is crucial. By collecting and analyzing data specific to each region, banks can tailor their digital signage to better suit local preferences and needs. This localized approach acknowledges that effective communication is not a one-size-fits-all strategy, enabling banks to connect more meaningfully with their diverse customer base."

The future of branches

Ultimately while branches will likely continue to contract, the evidence from other big banks shows that they will continue to be relevant and will continue to develop into strategic spaces for customers to make the most of their finances.

If you are interested in learning more about where branches are headed in the coming future, click here to register for the upcoming Bank Customer Experience Summit. Use the code AMCEDIT20 for 20% off checkout. Early bird pricing ends May 3.