The major banks have reconsidered their branch strategies and are expanding (pun intended) into new markets, covering parts of the country that were previously not adequately served by physical bank branches.
In this way, they can gain ground with coveted younger generations, especially Generation Z, who promise decades of loyalty to the right financial service providers.
The wave of mergers and acquisitions among credit unions (in some cases by buying up smaller banks) has reached a new record, it is reported S&Ptherefore, the smaller players are getting a little bigger and bolder. They are also competing for the deposits and cards of younger consumers.
Credit unions and even retailers can teach larger financial institutions a thing or two about how to get Generation Z on board and into their branches.
The physical footprint
Beginning of the year The US Federal Reserve identified “Bank deserts” that have occurred throughout the United States and affect 12 million people. The deserts are described as places where banks are located outside a certain radius: two miles for urban communities, five miles for suburban communities, and 10 miles for rural communities.
“Overall, the number of bank branches declined 5.6% from 2019 to 2023,” the Fed said in an online post describing the deserts.
In total, the banks have several dozen Branches by 2024. This is not a staggering figure, but it is a reversal of years of decline since the financial crisis.
Against this background JPMorgan Chase & Co. increase the number of branches. The company has set itself the goal of opening 500 new branches over the next three years (and renovate 1,700 existing locations). According to the latest Income According to the report, there were 4,884 stores at the end of the second quarter from 2024.
Bank of America Managing Director Brian Moynihan said in the company’s first quarter Income Annual investments in technology and other areas, rising from $3 billion to $3.8 billion, include investments in stores that would empower the company’s roughly 3,800 employees. Branch list.
Challenge and opportunity for Generation Z
For banks to expand their operations, the landscape of what they need to offer and who they target must change. Generation Z makes up about 20% of the U.S. population, And The older part of this population group, in their mid-20s, is a prime target for banks. These consumers have purchasing power, as can be seen from American Express Results that have repeatedly indicated that Generation Z (and Millennials) are the main users of Credit cardswhere spending rose by double digits.
But there is a volatility here. The PYMNTS intelligence report “Growing credit union membership through lending and omnichannel banking innovation” found that 42% of Gen Z members who bank at credit unions switched banks in the past 12 months, as did 44% of Gen Z members who bank at traditional financial institutions. Less than 5% of these bank switchers came from fintechs or neobanks, suggesting some ping-pong between traditional Industry players.
The average Generation Z The consumer used 10 products and features in the past year and would use another 18 if offered to them. For banks, this should be a sign that they have ample opportunity for cross-selling.
The PYMNTS intelligence report “Local roots: How community FIs can win over the digital-first generation” found that Generation Z said they would rather use services such as buy now, pay later (BNPL) and financial advice from their banks and credit unions (and the advice can be provided in person). 31 percent of Generation Z customers said they would Loyalties in the event that You generally do not receive peer-to-peer (P2P), BNPL or other relevant offers.
As larger players move into local communities, they must offer a continuum of online and digital-first services that meet these preferences — a retail experience that can use the branch’s experience for tailor-made cross-fertilization.
Over the next few years, physical presence is likely to increase in many communities, and major banks have an opportunity to make that presence a foundation for success with younger consumers.
