23 August 2017
visit www.avoka.com

JP Morgan Chase to close 300 branches as customers go mobile

24 February 2015  |  14757 views  |  9 JPMorgan

With customer flocking to its mobile app, JPMorgan Chase is planning to close around 300 branches by the end of next year.

In a presentation from its investor day, the bank says that it will shut down around 150 of its 5,602 branches this year, and another 150 in 2016 as customers continue to shift to digital channels, particularly mobile, for basic transactions.

The JPMorgan Chase app now has 19 million users, representing a 20% year-on-year rise. In 2014 the bank's mobile cheque deposit feature was used 45 million time, 25% up on the previous year, while the P2P payments service was used 30 million times, an 80% rise.

With ATMs also being used more for things such as deposits, branch tellers are being used less often. In 2007 90% of JPMorgan consumer deposits were done via a teller and 10% via ATMs. In 2014 just 42% were via teller, 48% via ATM, and 10% via the bank's QuickDeposit mobile service.

This is proving to be a money saver for the bank, with costs per deposit 50% lower in 2014 than they were just seven years earlier. In addition, digital customers are 10% more likely to have JPMorgan as their primary bank and are 15% less likely to leave the bank.

However, the branch is still viewed as a powerful channel, with 90% of customers visiting one at least once a year. Like many banks, JPMorgan is restructuring the branches it does keep to be more focused on advisory services. From a 2011 peak of 60,000 branch employees, the bank had just 46,000 by 2014, but 60% of these were advisory staff, up 10 percentage points on four years earlier.

Earlier this week an FDIC report claimed that "there is little evidence that the emergence of new electronic channels for delivering banking services has substantially diminished the need for traditional branch offices where banking relationships are built".

Comments: (9)

Brett King
Brett King - Moven - New York | 24 February, 2015, 20:23

It's earnings week in the US. Smart banks like chase are downsizing branches strategically to show the market they are digital ready and digital savvy. Banks that keep branch 'business as usual' will be in trouble in the short-term with markets.

2 thumb ups! 2 thumb ups! (Log in to thumb up)
Stanley Epstein
Stanley Epstein - Citadel Advantage Ltd - Modiin | 25 February, 2015, 15:25

Looks like it’s just a market pleasing move. Closing only 150 branches in 2015 out of 5,600 is not really significant. I wonder if the planned additional 150 branch closures for 2016 will be increased by this time next year.

1 thumb up! 1 thumb up! (Log in to thumb up)
Douglas Hartung
Douglas Hartung - Diebold - Houston | 25 February, 2015, 17:11

I wonder if the story would have been picked up if the headline read, "JP Morgan Chase to close 0.053% of branches over the next 18 months as customers go mobile".  I think Stanley may have nailed the actual intent.

Be the first to give this comment the thumbs up 0 thumb ups! (Log in to thumb up)
Douglas Hartung
Douglas Hartung - Diebold - Houston | 25 February, 2015, 17:16

*0.53%

Be the first to give this comment the thumbs up 0 thumb ups! (Log in to thumb up)
Brett King
Brett King - Moven - New York | 25 February, 2015, 17:18

Stanley is right. But think about this - the fact they are positioning debranching to the market shows their thinking at a board level, i.e. branches are NOT strategic long-term.

1 thumb up! 1 thumb up! (Log in to thumb up)
Matt White
Matt White - Finextra - Toronto | 25 February, 2015, 17:26

Just to clarify, Douglas: 300 of 5602 is 5.3%, which I'd say is a pretty big chunk.

4 thumb ups! 4 thumb ups! (Log in to thumb up)
A Finextra member
A Finextra member | 25 February, 2015, 18:07

While I understand both the economics and the optics of closing branches, in this day and age it is clear to enlightened bankers that they need to be wherever and whenever their customers need them to be....which means they need to have every channel - branch, phone, web, social, etc. - available for customers.  

Be the first to give this comment the thumbs up 0 thumb ups! (Log in to thumb up)
Derek Corcoran
Derek Corcoran - Avoka - Broomfield | 26 February, 2015, 11:11

Banks exist to make money. 

They make money by providing the right products and services to customers where and when customers need them. 

This move by Chase is a response to customer behaviour. We still need branches becuase (a) Some customers want them but that number is growing and (b) the bank doesn't allow you to do EVERYTHING you need through the digtial channel. 

Branch closures in the 90's were an attempt to reduce costs. But there wasn't a good viable alternative so it back-fired. Now digital (online & mobile) is that "alternative" and customers are voting for it with their taps, swipes and clicks. 

1 thumb up! 1 thumb up! (Log in to thumb up)
Dean Wallace
Dean Wallace - ACI - Global | 02 March, 2015, 09:14

@Derek, I agree. Remember in the early 2000s when there was a big push to out-source call centres and IVR because it was seen as better service and cheaper? Mixed success because when it boils down to it (no matter your age), sometimes you just want to speak to a person in your own language, which depending on the situation just might include being able to see the whites of their eyes. This didn't just happen in FISvcs, but other industries too (see my recent blog for a light-hearted example).

Its a numbers game, based on where a big player can net as much value as possible for the best penny spent. As the guys above have pointed out, the branch closure is not a huge impact on total branch and clearly well worth the message it sends that Digital is high on the priority order ("come to us Miss & Mstr Millenial").

 

Be the first to give this comment the thumbs up 0 thumb ups! (Log in to thumb up)
Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

JPMorgan Chase creates $3 million prize pot for innovation challenge

JPMorgan Chase creates $3 million prize pot for innovation challenge

24 February 2015  |  6061 views  |  0 comments | 16 tweets | 5 linkedin
Branches hold strong in face of digital onslaught - FDIC

Branches hold strong in face of digital onslaught - FDIC

20 February 2015  |  9423 views  |  2 comments | 20 tweets | 9 linkedin
Barclays puts the branch on the iPad

Barclays puts the branch on the iPad

09 February 2015  |  12628 views  |  4 comments | 27 tweets | 22 linkedin
Bank branches will save banks from digital challengers - Botin

Bank branches will save banks from digital challengers - Botin

03 February 2015  |  18746 views  |  32 comments | 37 tweets | 26 linkedin
Mobile continues to dominate at top US banks

Mobile continues to dominate at top US banks

15 January 2015  |  14633 views  |  0 comments | 32 tweets | 21 linkedin
US banks continue to trim branches

US banks continue to trim branches

14 November 2014  |  6642 views  |  0 comments | 6 tweets | 3 linkedin
Citi outlines plans to shrink the bank branch

Citi outlines plans to shrink the bank branch

05 November 2014  |  6254 views  |  0 comments | 6 tweets | 4 linkedin
More branches to close as UK banks retreat from the high street

More branches to close as UK banks retreat from the high street

03 November 2014  |  10174 views  |  1 comments | 9 tweets | 12 linkedin
Americans embrace mobile banking but the branch makes comeback

Americans embrace mobile banking but the branch makes comeback

26 August 2014  |  10103 views  |  8 comments | 21 tweets | 15 linkedin
Barclays ditches branch cashiers for 'community bankers'

Barclays ditches branch cashiers for 'community bankers'

11 July 2014  |  14103 views  |  3 comments | 11 tweets | 10 linkedin
Branches on the precipice as Brits embrace digital banking

Branches on the precipice as Brits embrace digital banking

08 July 2014  |  12536 views  |  2 comments | 16 tweets | 21 linkedin
Bank of America caters to Skype generation with telepresence roll-out

Bank of America caters to Skype generation with telepresence roll-out

23 May 2014  |  8677 views  |  0 comments | 9 tweets | 6 linkedin
JPMorgan Chase to cut 8000 jobs and shrink branches

JPMorgan Chase to cut 8000 jobs and shrink branches

26 February 2014  |  6181 views  |  4 comments | 7 tweets | 6 linkedin
Co-op to slash jobs and branch network in £500 million IT overhaul

Co-op to slash jobs and branch network in £500 million IT overhaul

04 November 2013  |  5202 views  |  0 comments | 7 tweets | 1 linkedin
US branch transaction volumes see eye-popping decline

US branch transaction volumes see eye-popping decline

24 May 2013  |  8096 views  |  0 comments | 16 tweets | 9 linkedin
US branch networks set for steep decline - Celent

US branch networks set for steep decline - Celent

17 May 2013  |  7687 views  |  1 comments | 16 tweets | 8 linkedin

Related company news

 

Related company information

JPMorgan Chase

Related blogs

Create a blog about this story (membership required)
visit www.abe-eba.euvisit www.vasco.comvisit www.worldpaymentsreport.com

Top topics

Most viewed Most shared
Mobile contactless spending accelerating in UKMobile contactless spending accelerating i...
12796 views comments | 27 tweets | 23 linkedin
Barclays pairs banking data with third party apps for SmartBusiness DashboardBarclays pairs banking data with third par...
11409 views comments | 22 tweets | 34 linkedin
Australia regulates digital currenciesAustralia regulates digital currencies
10584 views comments | 21 tweets | 35 linkedin
RBS to bring Silicon Valley to EdinburghRBS to bring Silicon Valley to Edinburgh
10522 views comments | 10 tweets | 8 linkedin
hands typing furiouslyWhy Is Risk Analytics Important?
10467 views 0 | 6 tweets | 1 linkedin