While the total number of bank branches in the country is on the decline, the branch remains an important means of delivering banking services. I was reassured of this fact recently in the Twin Cities where the First State Bank of Rosemount broke ground for a new branch. There are thousands of apartment and condominium units going up in Rosemount and the bank is eager to serve those folks. “But nobody goes to the bank anymore,” you might say. Not so in all cases. First State Bank’s main office serves as a vibrant community gathering place.
People seem to want to gather, meet up and otherwise engage in person. I think this is a result of the isolating experiences of the pandemic. A branch gives a bank an opportunity to offer its customers and prospects something more than just an account, but an actual personal experience. In many communities, encounters at the bank branch are welcoming and affirming.
The FDIC reports there are 69,997 bank offices and branches in the United States, which is down from the peak of 82,965 in 2012. In the 12 months ending June 30, 2023, banks closed 2,530 offices but opened more than 1,000. Bankers are appropriately considering options for delivering financial services via digital channels, but it remains important for them to continue to consider investing in their branch network.
Bancography, a Birmingham, Ala.-based consulting firm that tracks trends in branching, notes there is one branch for every 1,340 households in America. The ratio offers a guide for bankers who might be wondering if their particular market is under-banked (such as Minneapolis or Colorado Springs) or over-banked (Des Moines and Omaha). The consultants note that in the last five years, 11 of the 114 metropolitan statistical areas in the country actually saw the number of branches increase.
Some other interesting benchmarks: The average number of transactions in a month at a bank branch: 2,900; the average number of deposit accounts opened per month: 31; the number of direct loans closed per month: 10, and the average number of FTEs per branch: 5.1.
I recall hearing one consultant comment years ago that a branch is nothing but an expensive billboard. I don’t think that’s right. Community bankers are a lot smarter than that. The relationship-based banking that is their bread and butter is often best delivered in an inviting branch where smiles and handshakes are as important as teller stations and security cameras.