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JPMorgan Chase held its 2020 Investor Day presentation for its Consumer and Business Banking (CBB) unit earlier this week, highlighting growth in its branch network and digital channels, exemplifying the importance of prioritizing both.
The bank continued to execute on its branch expansion plan, entering 16 new markets since starting its expansion in 2018 and opening over 90 new branches, with the ultimate goal of establishing a branch presence in states whose populations sum to 95% of the US population. Meanwhile, it has simultaneously prioritized digital in 2019, with its $11.4 billion tech budget eclipsing those of other major banks.
Customers are turning to branches and digital channels for different use cases — underscoring why Chase is wise to not sacrifice its branch network in favor of digital investments.
Digital channels are increasingly being leveraged for daily transactions. Chase counts 52.4 million active digital users as of Q4 2019 — representing 74% of its consumer bank customers — and 37.3 million of them are active mobile banking users.
These users are increasingly turning to digital platforms for "everyday branch transactions," which reduced 49% per customer on average since 2014, equating to a decrease of nearly 200 million everyday branch transactions in that period. For example, 35% of check deposits are completed using QuickDeposit on mobile — a 6 percentage point increase year-over-year (YoY). The uptick in digital engagement has cut costs for Chase, which saw its variable cost per consumer bank household drop 20% since 2014.
Meanwhile, branches are integral in driving value through customer relationship building and retention. Chase noted that the decrease in everyday branch transactions has enabled it to devote more banker capacity to growing relationships: Time spent serving customers increased 7% YoY. And branches are still key to driving deposits for Chase: CBB deposits per branch increased 62% since 2014, and over 30 million households visited a branch in the last year.
Branches are also valuable to banks in solidifying customer loyalty, upselling more products, and preventing turnover: A bank's branch network was the most-cited factor that US consumers would consider if they had to choose a new financial institution for their primary checking account, per a Novantas study cited by Chase. During a time when major US banks are shuttering thousands of branches, Chase's approach poses a compelling argument for why incumbent banks should be careful to not forgo too much of their legacy channels in exchange for digital investments.
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