Why the Rise of AI Makes Branches More Important than Ever. (At Least for Now)
By Steve Cocheo, Senior Executive Editor at The Financial Brand
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A funny thing happened on the way to banks’ collective AI future. Instead of eclipsing bank branches, the explosion of AI tools and tech has actually made them more important to the industry’s distribution mix.
This won’t be a permanent state of affairs. But for the foreseeable future, branches will move to the fore as banks and credit unions fend off rising invisibility wrought by GenAI and consumers are confused by ever-multiplying financial services options.
Here’s why: “In a world where it’s increasingly difficult to sort what’s real from what’s fake, something solid projects safety and soundness,” according to Accenture’s new Top Banking Trends report for 2026. “The branch will become an increasingly important, brand-strengthening counterbalance to an AI-driven world. (Witness all the Apple stores.)”
This isn’t to say that digital technology and AI in particular won’t be significant to the industry’s future. In fact, “technology will evolve from a back-office enabler to the very fabric of banking,” the report says, “powering real-time decisions and hyper-personalized services.”
The implications for bank distribution, competition with neobanks and challenger banks, and omnichannel thinking all have to be factored into institutions’ near-term strategic planning.
Need to Know:
- “Smart money,” from AI-guided decisioning to stablecoins that power smart contracts and more for businesses, will increasingly be reality.
- Banks must work with consumers as they are today, but must also anticipate how they will be acting tomorrow. And tomorrow is closer than you think.
- Financial institutions must put chips on both reimagined branches as well as AI, in everything from ChatGPT search to a new generation of wearables that will play a financial role.
Why Do Branches Still Matter When AI Seems to Be Taking Over?
Several trends make branches more important to retail banking success, according to Michael Abbott, senior managing director and global banking lead at Accenture.
• Standing out from the crowd. As digital non-bank competition explodes, promoted online and joined by traditional players, brands run the risk of becoming invisible.
“In a digital world, where you’re flooded with options, having a physical brand that people can walk by is a pretty big deal,” says Abbott.
• AI-powered search changes everything. When the classic Google search ruled all, banking institutions welcomed — and worked at — having their sites crawled so their brands would show up in search.
But now, Abbott says, as more people tap AI search, more banking brands may find that they are not showing up in recommendations.
The implication: “Physical location may, believe it or not, make a comeback because it may be one of the few ways you can actually ensure that your brand is seen by customers,” says Abbott.
While digital has rapidly taken over routine transactions, consumers still like seeing other humans when they need consultation, have to have problems resolved, or have out-of-the-ordinary matters handled, says Abbott.
In a global sample of consumers, Accenture found:
- 63% like the idea of a physical bank that can help them run their finances.
- 76% would use micro-branches or smart banking booths.
Branch footprints spread. Abbott adds that the strategy embraced by the mega players will spread — branch systems won’t be as dense, but they will also range further and further afield in search of new business. “Optimization” of networks will continue.
Read more:
Will Chime Be Opening a Branch Near You?
Beware: The competition isn’t sleeping. Will digital brands go physical in response to AI threats? Accenture’s report indicates that in other countries digital brands have experimented with physical presence.
Will Chime and its cohorts follow suit in the U.S.? That depends, says Abbott.
The case against: Abbott says the pure digital fintechs aren’t where most consumers are putting their paychecks regularly, “at least not on the higher end.” For many there’s no percentage in this strategy.
The case for: However, “if they want to compete for larger deposit amounts, odds are they’re going to have to test opening branches.”
He says this has happened in other countries where a digital provider has decided to “move upstream.”
What to watch: Chime prides itself on being “a technology company, not a bank,” it said in its initial public offering filing. And Chime built its foundation on people earning under $100,000, many living paycheck to paycheck.
But, in its recent IPO, it said it wants to go after the next layer: Americans earning up to $200,000 annually. Those consumers have more money to deposit and deeper financial needs.
Read more: The Innovation Gap Forcing Banks into Fintech M&A
Why Trust Will Be a Moving Target
Abbott says that circumstances still favor branches because many consumers still don’t trust artificial intelligence, while they do trust their banks. And beyond that, they want to control their finances.
In surveys for the report, “people were very explicit about wanting the ability to pause and make decisions. They don’t want AI to make decisions for them,” says Abbott. “We’re not willing to outsource our banking decisions yet — not even close. ” Hence the desire for control and consultation.
Abbott says that’s not forever, however. “The line between AI and advice in a branch will blur.”
Here’s why it will blur: Fear of new tech always recedes. Abbott points to the time when people didn’t trust using their credit cards online. Now it’s second nature.
In time, to the degree AI puts people in control of their money, the more it will build momentum, according to Abbott.
The nature of competition will change. As banks, credit unions and their competitors increasingly aim for relationships, Abbott says they won’t be fighting over deposits or loans, but over consumers’ entire balance sheets.
Read more: Brett King: Bankers Have Five Years to Rebuild for Agentic AI, Or Perish
Fitting Your Bank into the Future
One of the themes of Accenture’s report is that money is becoming smart. That is, agentic AI and related tech will make consumers’ money dynamic.
“Imagine going to ChatGPT and saying, ‘Optimize my cash for me’,” says Abbott. Right now, he adds, having tried it, this just generates some advice.
But in time, he says, AI will come back with responses like:
“Mike, you’re leaving X thousands and dollars laying around. I can put that into short-term Treasuries for you, because it doesn’t look like you need it for payments. I can boost your interest rate by 3%. Would you like me to do that for you?‘”
How do smaller banks pursue this vision?
• Invest in the future to build tech that will connect the bank to a world that will continue to adopt AI.
• Simultaneously, lean into strategies that make the most of being a local institution.
• Tighten your aim. Right now, the best target is millennials.
“They’re now coming into wealth, and they’re trying to make their money work for them,” says Abbott. “They’re highly digital and they have no fear of using AI technology, unless they are an older millennial.”
What about Gen Z? Abbott says they are onboard with AI, “but they don’t have the money to optimize inside it,” yet.
“If you’re really young, it’s more of a science fair project,” he says. “But for a millennial, it’s real money.”
Read next — contrasting views about the future of branching:
