‘The Branch Is Dead’ … Is Dead: Have We Reached National Branch Equilibrium?
By Steve Reider, president at Bancography
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For years, numerous banking industry pundits have predicted the demise of the traditional branch — that the evolution of electronic channels would render branches obsolete. Worse, countless articles, columns and conference presentations chastised bank leaders who maintained a goal of robust branch networks, characterizing them as metaphoric dinosaurs, inviting extinction for their organizations.
But a funny thing happened on the road to branch obsolescence. The branch fought back.
Well, not the buildings, but the people working in the branches, and managing the branches. They refused to accept irrelevance. They adopted, retrenched and emerged with a revised purpose.
And now, there is no more debate over the relevance of the branch, and the benefit of branches to financial institutions.
Key insight: The debate is over. The branch won.
This doesn’t mean electronic channels are irrelevant — strong electronic offerings remain critical to successful banking institutions, too. But if you predicted the demise of the branch by 2020, admit it: You were not just too early with your prediction. You were flat out wrong.
Need to Know:
- On Feb. 18 JPMorgan Chase announced plans to continue its branch push by opening 160 new branches in over 30 states this year and to renovate almost 600 locations.
- This is just the latest branch expansion effort among multiple large players, belying the “branch is dead” mantra many had accepted as gospel.
- Federal statistics analyzed by Bancography indicate that the level of branch openings is almost offsetting the level of branch closures. This will continue as major banks’ branch opening plans come to fruition.
- As banks and credit unions focus harder on branches’ true mission, the inroads of digitization will be seen in better perspective.
What the Numbers are Saying About Branching
With the release of the FDIC’s latest branch-level statistics and similar data from the NCUA, we see empirical proof that branches remain a paramount part of the U.S. banking system.
A trend is a trend, until it isn’t. Years of declines in branch counts following the financial crisis of 2008-2009 may have given the illusion that the end of the branch network was an inexorable reality.
Here’s why: In the decade following the financial crisis, most years saw net declines of more than 1,000 branches in aggregate U.S. branch counts. In addition, the net decline of nearly 6,000 branches in the 2021-2022 period, at the peak of the Covid pandemic, may have appeared to herald the last gasp of branch banking in the U.S.
What was really happening: Instead, that point marked the apex of branch consolidation, at which U.S. banks collectively exhausted the easy, low-risk consolidation opportunities:
- The stock of geographic overlaps — for example, the merger of SunTrust and BB&T brought numerous closures where the two banks each had branches within one mile of the other.
- Declining rural markets.
- Misplaced, unprofitable locations.
In 2023, the industry saw a net decline of 1,500 branches, and in 2024, the decline abated to 1,100 branches. Looking at the latest FDIC and NCUA statistics, 2025 shows a net decline of only 400 branches from the prior year, a composite of about 1,400 branch closures offset by more than 1,000 new branch openings.
Key insight on branch growth: Interestingly, the pace of new branch openings has remained relatively steady in recent years, hovering between 1,000 and 1,100 newly constructed outlets each year over the past seven years. But keep in mind, most of the expansion initiatives announced by large banks will not result in ribbon cuttings until this year or 2027.
Coming branch bulge? If the announced plans of Chase, Wells Fargo, Bank of America, Truist, Fifth Third and other large banks are fully realized, the count of new branches will tick upward by a substantial increment.
The industry’s overall branch count is the net of the pace of opens and closes. And to the latter, branch closures reached their lowest level in more than 10 years, with only 1,400 closings nationwide. The pace of closures continues to drop, with 2025 marking the fourth consecutive year with fewer branch closings than the prior year. The level of branch openings almost offsets the level of closures.
Both trends suggest the industry may be approaching an equilibrium in branch counts: an appropriate level given consumer preferences and the competitive landscape.
Read more:
Looking Beyond Raw Branch Counts Towards Branch Efficiency
Even if the industry has reached an equilibrium branch level, it does not preclude gains in branch operating efficiency, as measured by the average household base a branch may service.
Do the math. The U.S. household base continues to grow at a pace of about 3% every five years. Even as branch counts remained essentially unchanged from last year, the nation’s ratio of households per branch ticked upward: from one branch for every 1,340 households in 2024 to one branch for every 1,365 households in 2025.
Key insight: In short, as an industry we can continue gaining efficiency in branch networks without closing branches, by maintaining a constant branch count even as the nation’s population grows.
Branches have continued to endure, even as digital channels have taken hold. Part of the answer is that many people like branches and the personal interaction they provide. In addition, the people who operate businesses really like branches.
We see this not only in the revealed preference of consumers and business owners continuing to walk into branches, but also in customer satisfaction surveys, where consumers award higher service-quality scores to the branch and its staff than to other channels.
Read more: Why the Rise of AI Makes Branches More Important than Ever. (At Least for Now)
So, How Did ‘The Branch Is Dead’ Thinking Catch On?
The key mistake of the branch-is-dead punditry was a fundamental misunderstanding of the role of the branch. Pundits presumed declining in-branch transaction volumes — which have become a reality — would eliminate the need for a branch.
What was missing: The pundits blatantly missed that the primary role of the branch has never been to cash your check, but rather to sell financial products.
Cashing checks and taking deposits is a necessary burden banks need to incur to support their clients, but that has never been a revenue-generating activity, or anything beneficial to branch income statements.
The branch’s primary purpose has always been the more complex task of providing a forum where consumers and business owners can discuss their financial challenges with knowledgeable advisors, who can provide specific products and services to address those challenges. And in this context, the one-on-one, in-person guidance branch officers can deliver remains invaluable, and irreplaceable.
Read more about the debate over branches:
- E.J. Kritz: Reports of the Death of the Branch are Greatly Exaggerated
- Brett King: Why Branches Will Never Be the Center of Banking Again
Why the ‘Evoked Set’ Means Branches Still Matter
Finally, branches carry significant value in building awareness for an institution, which can lead directly to sales. Consider, for example, a bank with no current branch presence in North Carolina, and an executive of the bank declares, “We plan to enter the Charlotte market.”
What does that even mean? In an age of digital channels, if a bank has a website where consumers can open accounts, isn’t it already in the Charlotte market?
Branch as billboard. Part of the answer lies in what markets call the evoked set — the group of competitors that come to mind when a need arises. If you’re driving in your neighborhood and see the light warning the fuel gauge is near “E”, where do you turn? What service stations come to mind?
If your bank or credit union does not reach a consumer’s evoked set, it cannot be selected. The awareness branches provide helps ensure that an institution at least reaches that stage of the decision process (i.e., the list of options under consideration).
Further, even as electronic channels can fulfill many needs, they cannot fulfill all needs, most notably the key cash-handling functions many small businesses require. Thus, for many institutions, branch presence may remain more important for the highly profitable segment of small business clients than for consumers, many of whom can fulfill most needs via the institution’s remote channels.
Read more: Big Banks Are Heading South… and Loving It
How Branches Build Market Share
That branches are beneficial in gaining share is evidenced in a more detailed look at the patterns of branch opens and closures.
More than a decade past the earliest proclamations of the demise of the branch, many of the fastest-growing and/or largest markets in the U.S. experienced increases in their branch counts in the past year. These markets include Atlanta, Austin, Jacksonville, Charlotte, Minneapolis, Denver and Indianapolis.
A key trend: Some of the more established larger markets in the nation continued to see declining branch counts, including New York, Los Angeles, Philadelphia, Chicago, Boston and Detroit. Those markets all suffered net decreases of 20 or more branches in the past year.
However, nationwide, opens in growth markets are now roughly offsetting closures in other markets.
The road ahead. And as banks continue to exhaust the roster of easy closing decisions, the current equilibrium state should persist, with consumers and business continuing to demand widespread branch availability, and financial institutions happy to deliver such.
This article originally appeared in Bancography‘s quarterly newsletter, Bancology.
Read more: Why NYC is Still the Key Proving Ground for Branch Innovation
