In the report Branch Boom Gone Bust: Predicting a Steep Decline in US Branch Density, Celent argues that the US retail banking branch network has yet to respond to the obvious migration of customers to new digital alternatives.

Since 1970, the US has seen 281% growth in the number of FDIC-insured bank branches, with growth rates averaging 3% CAGR. Branch growth over the last 40 years has dramatically exceeded US population growth. In 1970, there were approximately 107 branches per million individuals. By 2011, that had grown to 270 branches per million.

"There is every reason to suggest branch densities would be substantially lower now than 30 years ago, but just the opposite has occurred. Given this trend, a slow, but inexorable reduction in US branch density seems unavoidable," says Bob Meara, Senior Analyst with Celent's Banking Group and coauthor of the report. "Beyond simply reducing the number of operating branches, what is needed is a fundamental redesign of retail operating models. Rather than resisting the trend, banks should welcome it and reinvest the savings."

While Celent's logic is inescapable, the nation's largest banks appear to be taking wildly divergent paths, with JPMorgan Chase committed to a branch expansion programme and Bank of America conversely determined to right-size its estate.

A better glimpse of the future may be offered by Wells Fargo which recently outlined plans to open a series of technology-packed mini-branches in neighbourhoods that cannot support full-sized outlets.
At around 1000 square feet, the new sites will be around a third of the size of normal branches.

A similar strategy is being adopted north of the border by BMO, which is test-marketing smaller 'studio' branches in Quebec.