Industry research suggests that although most customers bank digitally, they still value physical branches for complex financial needs and relationship-building.

As a result, banks are rethinking rather than abandoning branches, opening smaller, more customer-focused locations, including café-style formats.

JRN by Bauer 43:32

The Reincarnation of the Bank Branch

Since the COVID-19 pandemic began in the U.S. in 2020, JRN has published several articles on shifting bank branch trends, including both branch closures and, at times, new branch openings. In that time the trend has been Big Banks closing and community banks opening. Here is a sampling over the years:

July 6, 2020: “The current environment has put a big damper on mergers and acquisitions and put cost-cutting measures on the front burner. And it comes as no surprise that some banks are taking the opportunity to shutter branches…  Over 100 new Community Bank locations were also opened and almost all are Full-Service Brick and Mortar branches.” - (JRN 37:25.5)

__________________________________

      May 3, 2021: In 2010, JPMorgan Chase Bank and Bank of America, (the nation’s largest two banks) reported a combined loss of 3,675 branches; more than 25% of the branches they operated in 2010 are now gone - (JRN 38:17)

__________________________________

July 7, 2022: “The United States lost more than 3,000 bank branches in the 12-month period ending March 31, 2022… nine (Big) banks were responsible for more than half of the closures.” - (JRN 39:27)

__________________________________

October 17, 2022: “in the five-year period ending June 30, 2022, the (banking) industry has lost over 10,000 branches (net)... Over 7,000 (70%) of them were closed by Seven Big Banks (banks with assets exceeding $50 Billion).” - (JRN 39:40)

     August 7, 2023: “While big banks make headlines with news of branch closings, there are still many parts of the country, particularly rural areas, that lack access to any bank, or credit union, for that matter. This problem is compounded by the fact that many of these rural areas also lack access to the internet. In these cases, it’s not the big banks that come to their rescue, but local community banks.” - (JRN 40:30)

__________________________________

March 18, 2024: “Community banks added 360 new branches during 2023. They were spread out among more than 300 banks.” - (JRN 41:12)

__________________________________

Banks started closing branches in 2009, in the wake of the Great Recession, well before COVID. COVID exacerbated the process as a physical presence was no longer considered a necessity. That turned out to be an error in thinking. According to the National Community Reinvestment Coalition (NCRC), for the first time in 17 years, we have now had three consecutive quarters of branch growth (fourth quarter 2025 through the second quarter 2026).

It seems that in spite of the growth in online banking, people still want a branch they can physically visit. An interesting survey of “middle-income Americans” conducted by Santander Holdings USA, Inc., Boston, MA earlier this month confirmed that most households still value their in-person support. In fact, while 89% said they manage most of their banking digitally, 91% believe that finding the right banking partner is important for achieving prosperity. Respondents also indicated a strong desire to be able to resolve complex issues in-person.

We think banks are finally realizing that customers with actual relationships are a lot stickier than those built online. In fact, this past spring Bancology reported, “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 – and are thus more prone to attrition.”

This was a follow-up to its January 2026 issue that concluded, “there is no more debate over the relevance of the branch, and the benefit of branches to financial institutions. The debate is over. The branch won.”

Bancology went on to explain that “many people like branches and the personal interaction they provide; and the people who operate businesses really like branches.”

Big Banks are finally taking note. One thing that both the NCRC and Bancology noticed was that the number of new branch openings has remained fairly consistent over the years. What has changed is number of closures and consolidations. Another thing that has changed is the look and feel of the bank branch. New branches tend to be smaller and cozier than those of yesteryear. Some don’t even have teller stations anymore. They feel more like a coffee shop than a bank branch.

We don’t know if Capital One was the first to set up Café-style branches, but it is certainly the most well-known. Capital One Cafes not only serve breakfast, lunch and snacks, guests can use the ATM, speak to an “Ambassador” about different products, or just hop onto the free Wi-Fi and settle in for an afternoon.

We will likely be seeing more banks embracing this concept as a way to build lasting relationships. What we see less of is store branches (which frankly never made sense to us anyway). No one wants to apply for a mortgage or get financial advice in a crowded and rowdy retail atmosphere.

We say that knowing very well that there is an exception to every rule. On August 10^th, 4-Star Woodforest National Bank, The Woodlands, TX (23220), opened its second office inside a Walmart store in The Villages, Florida. That brings its presence in the Sunshine State to 12 offices – all located in Central Florida. Woodforest is continuing to use locations inside highly trafficked retail stores and that strategy seems to be working for it. (Mind you, the average age in The Villages retirement community was 68.3 in 2022.)

Both NCRC and Bancology also agree on where most new branches are popping up. Texas is a high growth state for both branches and population. In fact, the Lone Star State expects to add between 3 and 5 million more people by its bicentennial year (2036). New branches here should be no surprise to anyone.

Florida (ground zero for the housing bubble in 2008) and Georgia are the other top branch growers. These states lost a daunting number of banks and bank branches during the Great Recession and are also both experiencing population growth. These three states lead the nation in new branch offices as banks of all sizes attempt to fill the need.

We see community banks expanding in areas like the Northeast, where there is much less population growth, but still a need for banking services. For example, since June 30, 2025 4-Star Somerset Trust Company, Somerset, PA (11112) has received approvals for five new brick and mortar locations. Two (both in sparce suburban (or rural/suburban) areas of Westmoreland County, PA – southeast of Pittsburgh) are already open. One in North Huntingdon, PA opened February 6th and the other opened in Mount Pleasant, PA on March 9th. Somerset Trust now operates through 49 regional offices: 45 in PA, three in MD and the other in VA.

Hundreds of other community banks are also opening branches in these smaller enclaves. Here they have a better chance of standing out and making a difference.