Joining many consumer goods retailers who are downsizing their brick and mortar locations, some of the nation’s biggest banks are now touting their bank branch closure plans. The primary driver behind both decisions is the same: more banking activity is occurring online and less in the physical world.
But banks have an additional driver: regulators are issuing stricter capital regulations are driving up accounting and personnel expenses in order to manage compliance.
Given the higher cost environment, banks – which make up a significant portion of South Jersey commercial properties – no longer are quietly downsizing their branch networks. Instead, bank executives are making plans for further consolidation loud and clear, pointing out steps how they plan to rectify what many top bankers refer to as “core banking inefficiencies.”
Over the last five years, banks that are a component of retail space in South Jersey have trimmed their branch networks by 13,406 bank branches, while opening just 8,011 new ones, according to FDIC statistics. Their footprint in now 4.6% smaller than five years ago, with slightly more than 95,000 U.S. offices opened today.
In discussions with investors, banks are now talking about cutting another 4% to 5% of their branch networks this year alone.
At its peak, Bank of America had as many as 6,100 bank branches, including a number of them in South Jersey retail space. That has fallen to about 5,000 branches today as competitive conditions and customer behaviors have changed.
Bank of America said it has about 31 million banking customers, and of those, about 17.6 million of them use mobile banking. In addition, the bank said about 60% of its transactions are now all digital, made through phones, online or ATMs at branches, according to Brian T. Moynihan, chairman and CEO of Bank of America.
Jamie Dimon, chairman and CEO of JPMorgan Chase, underscored the accelerating move to online banking, saying the recipe for failure is for a bank to never change locations, never change size, or never change the way they operate.
JPMorgan closed about 100 branches in the past year – with some of them in South Jersey retail space – and now operates about 5,600 in its network, with further branch closings planned.
In addition to responding to consumer trends, bankers also noted the added costs associated with complying to new regulations.
After several rounds of branch closures, Donna Townsell, vice president of corporate efficiencies at Home Bancshares, said, “The savings and efficiencies gained from these closures will help to tee us up for the upcoming expenses that we expect to incur as we begin the planning for Dodd-Frank stress testing requirements.”
The long lead time before branches both in and out of retail space in South Jersey close is also important in the rightsizing process, other bankers noted. Banks now find themselves in a transitional phase of serving two distinct customer basis: the old-school, in-branch customers, and all-digital customers.
For more information about South Jersey retail space or any South Jersey commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) or Leor Hemo (leor.hemo@wolfcre.com) at Wolf Commercial Real Estate, a premier South Jersey commercial real estate broker that specializes in retail space in South Jersey.
Wolf Commercial Real Estate is a South Jersey commercial real estate brokerage firm that provides a full range of South Jersey commercial real estate listings and services, marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other South Jersey commercial properties for buyers, tenants, investors and sellers.
Wolf Commercial Real Estate, a South Jersey commercial real estate broker with expertise in South Jersey commercial real estate listings and services, provides unparalleled expertise in matching companies and individuals seeking new South Jersey retail space with the South Jersey commercial properties that best meets their needs. As experts in South Jersey commercial real estate listings and services, the team at our South Jersey commercial real estate brokerage firm provides ongoing detailed information about South Jersey commercial properties to our clients and prospects to help them achieve their real estate goals. If you are looking for retail space South Jersey for sale or lease, Wolf Commercial Real Estate is the South Jersey commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.
