Why are we still talking about branch or not to branch?
The debate about bank branches has become oddly polarised. One side argues that branches are an expensive relic of the twentieth century. The other insists they remain the heart of community banking. The reality, as always, is more nuanced. The future probably belongs to neither mass branch closures nor mass branch expansion, but to a complete rethinking of what a branch actually is.
For almost twenty years the industry’s conversation has revolved around one question: how many branches should banks close? It was a perfectly logical discussion. Customers moved online, smartphones became the primary banking interface and transactions that once required a visit to the high street could suddenly be completed from the sofa. Deposits, transfers, payments, card management and even loan applications migrated to apps.
Branches became expensive buildings performing increasingly low-value transactions.
That logic drove thousands of closures across Europe and North America. In the UK alone, more than two-thirds of bank branches have disappeared over the past decade. Every annual report proudly highlighted cost reductions while digital adoption continued climbing. It seemed obvious that branches were heading for extinction.
Then something unexpected happened.
Some of the world’s largest banks started opening branches again.
The most notable example is JPMorgan Chase. Rather than retreating from physical banking, it announced another wave of new locations while simultaneously refurbishing hundreds of existing offices. The argument was surprisingly simple. Digital channels are excellent for routine transactions but relationships, trust and complex financial advice still benefit enormously from face-to-face interaction.
This appears to contradict everything fintech has argued for the past fifteen years.
Or does it?
Perhaps the mistake has been assuming that a bank branch is a place where transactions happen. That definition expired years ago. Cash withdrawals belong in ATMs, payments belong on smartphones and transfers belong inside apps. Cheques, thankfully, belong to history.
The transaction branch has disappeared because technology has made it unnecessary but, and this is the real point, the relationship branch is more valuable than ever.
This is exactly the distinction made in both the recent The Financial Brand analysis and Brett King’s Branch Tomorrow. Interestingly, although they approach the subject from different directions, they reach remarkably similar conclusions. The old branch has gone forever. The new branch must justify its existence by doing something digital cannot.
Those who argue for closures have strong evidence.
Running thousands of physical locations is enormously expensive. Rent, maintenance, security, staffing and utilities consume capital that could instead fund artificial intelligence, cloud infrastructure or better mobile experiences. If ninety-eight per cent of customer interactions already happen digitally, why spend millions supporting the remaining two per cent?
There is another argument that is often overlooked which is that branches can actually make banks worse. When executives continue investing in buildings, they often underinvest in software. Legacy infrastructure survives because money that should modernise technology gets diverted into maintaining physical estates. Every pound spent replacing carpets is a pound not spent replacing COBOL.
The digital-first argument therefore isn’t simply about cost reduction. It is about opportunity cost.
Banks compete today on customer experience, APIs, data quality and AI. Those capabilities rarely improve when another branch opens on the high street, and yet the pro-branch argument has also become stronger because financial decisions are emotional. Buying a first home, planning retirement, managing bereavement, dealing with fraud or arranging business finance are moments where customers often want reassurance rather than another chatbot.
Trust still has a physical dimension.
The mere presence of a branch reinforces the idea that a bank exists beyond pixels on a screen.
Marketing experts have long argued that visibility itself builds confidence. A branch acts almost like a permanent billboard saying, “We’re here if you need us.”
That psychological reassurance is difficult to replicate digitally.
There is also a demographic reality.
While younger customers happily manage everything through their phones, older customers continue to value face-to-face support. Small businesses handling cash still need somewhere to deposit it. Rural communities still depend upon physical access to financial services. Closing the final branch in a town often creates political as well as commercial consequences.
The recent resurgence of interest in branches reflects this broader understanding. They are no longer measured by transaction volumes but by relationship value.
The interesting question therefore is not whether banks should open or close branches ... it is what should happen inside them.
Imagine walking into a bank in 2030. Nobody stands behind a counter counting banknotes. Instead, AI has already analysed your financial life before you arrive. The adviser knows you may soon move house, that your business has excess cash earning little return, that your children are approaching university age and that recent spending patterns suggest your insurance needs updating.
The meeting becomes proactive rather than reactive.
The branch transforms into a financial health clinic rather than a transaction factory.
Artificial intelligence makes every adviser dramatically more knowledgeable whilst allowing human empathy to remain at the centre of important conversations. That is a fundamentally different proposition.
It also explains why banks like JPMorgan continue investing selectively in physical locations while simultaneously investing billions in AI and digital technology. They are not betting on yesterday’s branch. They are building tomorrow’s experience hub.
Perhaps both sides of the argument are therefore right.
Banks should absolutely continue closing branches that exist purely to process transactions. Those buildings no longer add value. At the same time, banks should absolutely open branches where they strengthen relationships, expand into new communities or support complex financial advice.
The future is not about having more branches or fewer branches. It is about having better branches.
The irony is that technology has not killed the branch after all. It has simply forced banks to rediscover why they built them in the first place.
For more, checkout:
[1]: https://www.ft.com/content/70fbe02e-2131-4c4e-a080-b8b3c6c68d33
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...