Bank branches fade as services move online

As consumers increasingly use online and app-based services, institutions close area locations

Houston has 5 percent fewer bank branches today than it had in 2010, a new report shows, reflecting consumers’ increasing desire to skip the lines and tellers in favor of online and appbased services.

Houston has 5 percent fewer bank branches today than it had in 2010, a new report shows, reflecting consumers’ increasing desire to skip the lines and tellers in favor of online and app-based services. That’s changing the role of bank locations, which one director said were becoming “more of an advice center.”

The Houston area saw a net loss of 75 branches between 2010 and 2016, the real estate investment firm JLL reports. More than half of the closures, 44, have occurred since 2013 as the trend continues to accelerate. Cities across the U.S. saw similar or steeper declines.

“Especially the younger generation, they just don’t go inside banks anymore,” said Dan Bass, managing director of investment banking for bank advisory firm Performance Trust Capital Partners. “They’re just not as relevant as they used to be.”

The drop in local bank branches could have been steeper had the region not experienced a 14 percent population increase over the same period. The nation overall saw a 5.6 percent drop in bank branches, and JLL forecasts a further 20 percent reduction over the next five years.

“There’s not a complete retrenchment in the industry,” said Walter Bialas, director of research with JLL in Dallas. “It’s more of an optimization.”

Bialas said he expected his research to turn up growth in bank branches in the nation’s hottest population centers like Florida, California and Texas. But it wasn’t so. Even those regions saw drops.

And it’s not necessarily bad news for the banks. Despite storefronts closing across the nation, total U.S. bank deposits have grown more than 40 percent since 2010. So customers aren’t ditching banks, they’re just changing the way they use them.

Gone are the days of Friday lines to cash paychecks. Customers now can snap a picture and deposit a check with their

phones. Almost no one shows up to withdraw cash, to check balances or to make transfers anymore.

“Customers are coming into the branch to discuss some of life’s biggest moments,” said Alice Rodriguez, regional director in charge of JPMorgan Chase branches across Texas’ largest cities. “That makes the branch more of an advice center.”

Banks are changing their philosophies toward branch locations. Bialas said banks no longer push to operate as many branches as possible, often across the corner from competitors, in order to increase visibility and claim market dominance. Rather, branch strategy focuses more on customer service.

Chase is adding office space for conversations on financial advice. It’s a similar story at Bank of America, spokeswoman Betty Riess said.

As customers do routine transactions online, Riess said, “we’re seeing the branches are becoming more of a destination for financial advice on life priorities,” like mortgage borrowing, starting a business or saving for college or retirement.

So, she said, branches have added financial specialists and added “digital ambassadors” “dedicated to helping customers adapt to emerging technology.”

That technological change puts disproportionate pressure on small community banks, which often don’t have the resources to develop their own mobile platforms, and lag behind the big banks in technological innovation.

“Because we’re not up to par when it comes to our tech presence, we lose the opportunities to do business with the millennials,” said Sheri Price, assistant vice president for business development and marketing at Houston-based Unity National Bank, which has two locations.

But she said the bank still has a “strong core of depository relationships due to that community feel.”