Banks are building more branches for the first time in a decade

US banks added more net new branches in 2023 for the first time in a decade. That bet on new brick-and-mortar locations isn't letting up so far in 2024.

Last year banks added 94 net new branches across the US, according to new data released this week by the Federal Deposit Insurance Corporation. That was the first annual period since 2012 they opened more than they closed.

It ended a decade-long consolidation of physical locations around the country triggered by the aftermath of the 2008 financial crisis, which forced many banks to cut costs and reduce the size of their footprints while also relying more heavily on digital banking to connect with customers.Banks still have a long way to go to make up for all the locations they shuttered. The number of US branches was 69,684 at the end of 2023, down from 82,461 in 2012.

This year a number of sizable banks have announced plans to add back more. They include Pittsburgh lender PNC Financial Services Group (PNC), Cincinnati lender Fifth Third Bancorp (FITB), and industry colossus JPMorgan Chase (JPM).

The reason some banks are making new bets on physical branches is that they view the physical locations as ways to grab new wealth management and small-business customers without making acquisitions of rivals that might not pass muster with antitrust regulators, according to some industry observers.

"The largest banks have been constrained from making domestic acquisitions, encouraging expansion into new domestic markets by opening new branches," said Eric Rosengren, former president of the Federal Reserve Bank of Boston.

Wealth management — a big focus for many banks looking for alternative revenue sources beyond lending — "tends to require more personal contact" that only a branch can provide, he added.

The recent turnaround is surely affected by the expansion of the biggest bank in the US, JPMorgan. It opened a net number of 110 branches in 2023 and this year announced plans to build 500 new branches over the next three years while renovating another 1,700.

"You're going to see our network grow versus shrink over the next couple of years," JPMorgan Chase’s CEO of consumer banking Jennifer Roberts told Yahoo Finance.