Bank of America (BofA) is intensifying its focus on expanding its physical presence by planning to launch over 165 new branches across 63 markets by 2026. This strategic move, aimed at enhancing customer service, will see nearly 40 openings this year. The bank’s initiative is rooted in a dual approach: while digital banking serves everyday transactions, physical branches provide a setting for complex financial consultations. BofA’s commitment to its expansion strategy underscores the ongoing relevance of brick-and-mortar locations in the digital age.
Why Are Banks Investing in Physical Branches?
The necessity for physical branches persists even as digital banking becomes widespread. Customers often seek in-person advice for complex financial issues, prompting BofA to enhance its branch network. Aron Levine, BofA’s president of preferred banking, emphasized that their clients primarily use digital services for routine banking but visit branches for more intricate financial matters.
“While most clients are using our digital capabilities for their everyday banking, they are visiting our centers for in-person conversations about their more complex financial needs and advice on their life priorities and financial goals.”
This strategy aligns with the broader trend seen in the banking sector, where physical spaces are valued for in-depth consultations.
What Are the Competitors Doing?
Rival J.P. Morgan Chase has also announced plans to expand its branch network, aiming to open 500 new branches and renovate 1,700 existing ones. This competitive landscape reflects a shared understanding among major banks of the continuing importance of physical branches. By providing customers with physical locations, these banks aim to complement their digital offerings and give clients a tangible space for financial discussions.
In the past, BofA has invested over $5 billion in modernizing its network, renovating more than 3,000 branches over the last decade. This substantial investment reflects a long-term commitment to maintaining and growing its physical locations alongside advancements in digital banking. This historical context highlights a consistent strategy of balancing digital services with a robust brick-and-mortar presence.
The trend of expanding physical locations is not limited to traditional banks. Credit unions have also recognized the significance of local branches, as indicated by a PYMNTS report, which found that 12% of credit union members switched from traditional banks due to the lack of a local presence. This shift underscores the value customers place on physical accessibility, even in an increasingly digital financial landscape.
As more financial institutions renew their focus on physical branches, the challenge remains to integrate these with innovative solutions. Customers, particularly those of credit unions, are increasingly expecting innovation from their financial providers. Eight out of ten credit union members prioritize innovation, whether from banks or credit unions.
“While traditional for-profit financial institutions enjoy a reputation of outpacing their nonprofit counterparts when it comes to services and products, credit union members are more likely than non-CU members to prioritize innovation,” PYMNTS noted.
This highlights the importance of not only maintaining a local presence but also continuously evolving service offerings.
BofA’s plan to open more financial centers signifies a broader trend within the banking sector, where physical and digital platforms are seen as complementary rather than mutually exclusive. This expansion strategy, driven by a need to provide comprehensive financial services, reflects a nuanced understanding of customer preferences in an evolving market. By investing in both physical branches and digital platforms, banks can offer a holistic approach to meet diverse client needs.
