Bricks Create Clicks: Branches and Digital Should Work Together
By Steve Reider, president at Bancography
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The median cost of new freestanding branches in the U.S. now exceeds $3 million. Accordingly, entry into a new market with a multi-branch initiative can require significant capital investments, readily surpassing $10 million in scope for even a three-branch expansion effort.
Those substantial capital requirements prompt questions about less-expensive alternatives. This is often framed along the lines of “Can we use a digital model and avoid those branch costs?”
Sadly, for most financial institutions, the answer to that question is “no.”
That said, a hybrid approach takes advantage of the “digital halo” that branches can bring.
Need to Know:
- In multiple recent articles, The Financial Brand found that institutions have discovered that digital engagement is stronger and longer-lasting in a given market when institutions have branches there. Examples include Citizens Bank and BMO.
- Bancography research indicates that the majority of banks and credit unions surveyed don’t plan to alter their branch networks. However, of those planning to expand in 2026, 58% plan to add more than one branch.
- “Billboard value” still appears to be a benefit of maintaining branches in new and existing markets.
Why Most Banks Need Branches as a Marketing Asset
Two related factors preclude the branch-free approach.
• First, if your institution does not have a branch in the proposed new market, how do consumers know it exists?
No one can use an institution’s digital channel until they know the bank or credit union exists.
• Second, an institution can forgo branches and seek to gain awareness through advertising instead, both in online and traditional media.
But for the typical community bank or credit union, we promise: you cannot shout as loudly as Ally. Or USAA. Or Marcus by Goldman Sachs. Or any of the other nationwide online banks.
And in selling online CDs and money market accounts, the winners are those that shout the loudest, via the largest advertising budgets.
Key question: So what options does a smaller institution have?
In a recent discussion of expansion strategies with longtime Bancography colleague Darrick Weeks (president and CEO of Purdue Federal Credit Union, a $2.1 billion institution based in West Lafayette, Ind.), Mr. Weeks espoused a strategic gem that gives a useful framework for overcoming the challenge of costly new-market expansion efforts:
“The branch is the marketing asset; the account is digital.”
Read more: ‘The Branch Is Dead’ … Is Dead: Have We Reached National Branch Equilibrium?
How Branches’ ‘Marketing Halo’ Helps Pull in Digital Business
That observation is rooted in the belief that while a branch can gain traction from the consumers in the immediate surrounding neighborhood, it also carries what our friend described as a “marketing halo.”
Defining the “halo effect.” The marketing halo is an area beyond the typical drawing area for in-branch account openings where consumers will still have awareness of the institution’s existence, and thus the ability to utilize its online channels. Digital access may be more convenient than a branch visit.
A visualization: Think of the branch as having two concentric trade areas:
• An inner draw for traditional account openings based on local convenience. This supplemented by …
• An outer draw — a digital halo— where a combination of awareness from both the branch’s presence and geographically targeted advertising can entice consumers to open the account via the institution’s online channels. (They know the branch is there if needed, albeit not directly down the street.)
Recall high school geometry class. If the inner drawing range is two miles, but the halo brings consumers from the two-to-four-mile band into play as well, the halo band is three-times larger in area than the inner band. The inner two-mile drawing range would have an area of 4 π square miles; the outer halo would encompass an area of 16 π square miles — 12 π above and beyond the inner band.
Key insight: So the halo-ring alone represents a trade area three times larger than the inner band.
And if population is distributed uniformly throughout the area, then the halo avails the branch of an additional audience three-times greater than what it could reach solely via its local-convenience, inner-band audience.
Of course, reaching the halo audience requires top-tier digital capabilities. But it is the presence of the branch with those digital capabilities that brings the halo audience into play, in a way the digital channel alone could never realize.
Success will still require leveraging the marketing asset of the branch through community engagement with supplemental advertising to reinforce awareness in the broader regions within the digital halo.
But the latter component remains more readily attainable than gaining awareness solely by blanketing online channels with top-tier rate offers — just one more voice trying to outshout the giants.
Read more: How Your Bank Can Fight ‘Soft Switching’ — and Steal a Few Accounts of Your Own
The Gap Between Online and Branch Engagement Levels
Keep in mind, even for institutions supplementing branch efforts with digital channels, empirical evidence shows online-originated relationships carry lower cross-sell ratios — often by as much as one full product per household, when comparing an institution’s cross-sell ratio for branch-originated versus remote-originated relationships. Thus they are more prone to attrition.
Key strategy: Thus, it remains imperative to strive to migrate relationships emanating within the halo region to the related branch. Perhaps the best way to start is with a simple welcome phone call:
“Thank you for opening an account with Metro’s online banking center last week. If you ever need anything, we have a branch nearby, too. Stop in anytime.”
The transition from the digital channel to the branch channel can foster the critical cross-sell opportunities that not only bring immediate additional revenue, but also lock down those relationships for years ahead.
Our research has noted that the early 2000s “clicks and bricks” slogan still describes a beneficial approach, though we might invert it to “bricks enable clicks.”
However, our colleague’s enhancement frames not only the what but the how.
And we recommend “The branch is the marketing asset; the account is digital” as a mantra for every community bank or credit union executive seeking to reduce market-entry costs and expand branch reach through a hybrid physical-digital offering.
This article originally appeared in the spring 2026 edition of Bancography‘s quarterly newsletter, Bancology.
Read next: This California CU Grew by Serving the Movie Market. Now It’s Taking Its Show on the Road
