NEW YORK — It’s like Sephora or Starbucks now offering a checking account.
After years of closing or largely neglecting brick-and-mortar bank branches in the U.S., the nation’s largest banks are spending hundreds of millions of dollars refurbishing old locations or building new ones, changing the look, feel and purpose of the business. local bank branch. .
Many of these branches are larger, airier and intended to make people who walk in with difficult financial questions feel more comfortable. Others are being designed as “third spaces” where local nonprofits or community representatives can hold workshops or seminars for clients or neighbors. They contrast with the marble-clad temples built 50 or 75 years ago and the musty cookie-cutter branches that recently cluttered suburban malls.
“Entering an establishment can be intimidating. We are creating these spaces now so that everyone can feel welcome,” said Diedra Porché, head of community and business development of consumer banking at JPMorgan Chase. & Co.
Porche leads a team of 150 employees who work in what JPMorgan now calls “community centers.” These are larger facilities with space for non-profit organizations to give presentations to local residents and give workshops to people seeking advice. The newest of these community centers opened in April in The Bronx, attended by New York local and state politicians and JPMorgan Chairman and CEO Jamie Dimon.
JPMorgan isn’t alone in designing verticals that focus less on sales and more on giving advice. Capital One opened its newest “café” in Union Square in May, a space that serves coffee and pastries and where anyone, Capital One customer or not, can sit and work and network in the café.
“Banking shouldn’t be the experience of someone sitting behind a desk in a suit talking about your loan application, but it should be someone sitting next to you and offering to help you with questions about money and finances,” said Jennifer Windbeck . , head of Capital One’s retail banking channels and operations.
Banks like JPMorgan Chase, Bank of America and Wells Fargo had been steadily closing branches since the 2008 financial crisis. They saw little need for their networks of thousands of physical locations when fewer Americans regularly entered a branch for routine banking needs and ATMs had largely replaced polling places. In the remaining branches, customers often noticed worn carpet and worn office furniture and cubicles.
It seemed as if the bank branch’s fate was sealed when technological advances during the pandemic made it possible to buy a house or car without physically interacting with another human. The U.S. banking industry is estimated to have closed about 4,000 branches since 2020, according to the National Community Reinvestment Coalition.
Policymakers and community advocates criticized the industry for closing so many branches after the financial crisis, particularly in low-income neighborhoods where financial services were often limited to check-cashing stores, pawn shops and payday loan stores.
“When bank branches close, there are several negative impacts on the surrounding community. Small business lending and activity in the area are declining. More and more people are turning to alternative financial services that open them up to unregulated and predatory financial practices. A key commercial tenant and employer is being lost,” NCRC researchers wrote in a 2020 report on the waves of bank branch closures.
Local bank branches are so important that even Congress got involved in the issue during the Civil Rights Era and passed the Community Reinvestment Act, a law designed in part to ensure that banks in poor neighborhoods had branches in the same way they did in wealthy neighborhoods.
The trend of branch closures may reverse, or at least slow down. Chase is adding net new branches, while Bank of America has significantly reduced branch closures. Other major banks such as Capital One and Wells Fargo are slowly adding branches. Banks are finding new uses for their branches, often in unexpected ways.
Despite the spread of digital banking, bankers and community groups still emphasize that physical branches are a necessity. The industry and independent research have shown that Americans still want to enter an industry when it comes to major financial issues such as buying a home or car, preparing for retirement, dealing with the financial impact of marriage or divorce, or having a new child.
Some banks are even building new branches in unique locations that do not initially scream ‘this must be a bank’.
For example, Bank of America brought in Rebekah Sigfrids from Sephora and Victoria’s Secret as its first in-house designer for branches instead of using traditional outside contractors.
An example of Sigfrids’ work is a Bank of America branch opened in Williamsburg, Brooklyn, which was previously used as a studio space for a sculptor. The clean, airy branch contains sculptures by the artist who was previously in the space, as well as additional art from the neighborhood.
“We’re really thinking now: how do we fit this industry into the community?’ Bank of America had its own look and feel, but what about when we get into Williamsburg? What about if you’re in downtown Manhattan or Seattle, or what if you’re in Texas?
JPMorgan Chase has opened nearly two dozen of what it now calls “community centers.” These are larger branches in low- and moderate-income neighborhoods, designed to provide expanded services to Chase customers with typically lower incomes.
Chase builds these centers with multi-purpose spaces so that nonprofits or Chase employees, known as community managers, can host financial education workshops or seminars for the community. Chase employees are specifically instructed not to talk about Chase products during these workshops, to create a higher level of trust, Porché said.
“We wanted to combine all the traditional needs in an industry, but expand that space to where customers can also get financial workshops and programming. These (new branches) should be an anchor for the community,” she said.
