NEW YORK–JPMorgan Chase said among the reasons it is aggressively looking to add branches—at a time when many major banks are reducing them—is to fill voids in “banking deserts” and to help build communities.
The $2.5-trillion bank said it hopes to place many of the 400 new branches it plans to build over the next five years in areas where no other financial institution currently has a presence. The bank currently has approximately 5,100 branches in the U.S.
“We asked ourselves: At the 60,000-foot level, how do you build thriving communities?” Peter Scher, head of corporate responsibility, told Fortune in an interview. Adding branches, he told the publication, “is part of a very self-supportive circle that leads to more economic growth.”
The number of bank branches in the U.S. has declined steadily since the financial crisis, from a peak of around 97,000 in 2007 to an estimated 89,300 in 2017, and the pace of the decline is accelerating, Fortune noted.
‘Change the World’
“But the pullback hasn’t come without consequences, particularly for small businesses,” observed the Fortune report. “For business owners, the absence of branches and the face-to-face relationships that go with them can complicate everything from getting financing to depositing earnings to making payroll, and local economies can suffer as a result.
“That’s the dynamic that JPMorgan Chase, No. 18 on Fortune’s Change The World list this year, is aiming to reverse,” the publication stated. “The branch-expansion initiative is part of a broader push by the bank to support entrepreneurship and economic revitalization in underserved neighborhoods all over the country, as exemplified by its $150 million investment in Detroit’s economy and its Entrepreneurs of Color Funds, which have rolled out in three new cities this year.”
According to JPMorgan Chase, the first branches under the new program will open between October and the end of the year. Those will include three branches in Washington, D.C.’s Wards 7 and 8, where the bank last year announced a broader $10 million campaign to support small-business development and affordable housing.
‘Multiplier Effect’
Thasunda Brown Duckett, CEO of consumer banking, told Fortune that putting branches in low-to-moderate-income communities will help local businesses and homeowners cultivate relationships with the bank that will help them grow. She also told the publication that bank branches have a “multiplier effect” when they come into a market. “The real estate team, the cleaning team, the ATM maintenance, those generate jobs,” she explains. “And when we are the anchor tenant, that creates a confidence that can attract other businesses.”
JPMorgan Chase further estimates that the 400 new branches will employ about 3,000 people nationwide. Duckett and Scher told Fortune the bank will collaborate with local nonprofits to help train job-seekers with the right skills for bank customer-service jobs, so that the branches can do most of their hiring locally.