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Keeping the Branch Bank Doors Open

Going to your local bank doesn’t have to hurt

It is no secret that the state of the branch bank has been on the decline since 2009. The number of branches at its height was around 98,000 which has since dropped to 90,000. By the end of June, 2017 the number of branches fell by more than 1700 locations, the most significant drop on record for a 12 month period¹. At the same time the number of customer visits at bank branches is expected to drop from an average of 7 to 4 times a year by 2022². Millennials, who currently represent the largest market segment, are leading the decline with on-line and smart phone banking rather than visiting their local branch.

94% of millennials are active users of on-line banking”³

Not all of the reduction can be attributed to the financial crisis in 2009 or the growth of digital banking however. Some of the decline is a result of consolidation, relocation from less densely populated markets to urban locations, or mergers and acquisitions eliminating branch redundancies. In fact, a few banks are actually planning to add new branches. JP Morgan Chase expects to open 400 branches in new markets in the coming years.

Is the branch bank becoming irrelevant? Is it only a matter of time that they disappear? According to Steve DeLaCastro, VP/Banking & Financial Services at Cognizant: “retail branches will continue to maintain a prevalent role in acquiring, retaining and serving customers across digital and physical channels. Fewer, smaller, smarter and more open: That’s the future of retail bank branches”⁴.

Paul Pester, CEO of TSB Bank notes that customers are adopting mobile and digital banking at a pace never seen before. But the importance of having a branch in a convenient location is as important as ever for consumers.⁴

The bank branch of the future will be different not dead. It will be a vital destination where digital banking and human interaction meet”⁵

The on-premise experience doesn’t appear to be going away anytime soon. With all the news about Amazon displacing brick and mortar businesses, 90% of retail sales are still done through these brick and mortar stores. Retailers are moving to multi-channel strategies. Legacy retailers are buying up online businesses while some online retailers are buying up brick and mortar — as is the case with Amazon acquiring Whole Foods. While Millennials may not prefer a visit to their local bank, it is not because they reject the on-premise experience.

70% of millennials prefer brick and mortar retail”⁶

Westlake Whole Foods Market


The future of the branch bank rests with how well it can create a meaningful and relevant on-premise experience that compliments the on-line experience. Equally important is creating a branch environment that customers want to go to and are experiences that are consistent with other brands that they are loyal to.

According to Business Insider 2018 study on Millennials top 100 brands, Apple, Starbucks, and Nike were in the top 15.

Think about how the experience of going into a Starbucks or Apple Store compares to going to the typical branch bank. Obviously the products and services are different, but consider what it is that makes the experience appealing and memorable — it is attention to design. In a study conducted by Kelton Research it found that:

Great Design is a priority for the Millennial generation.⁷

Designing branded environments is more than simply picking out furniture, carpet, and counter tops. It is about designing an environment that reinforces the brand experience through the engagement, interaction and the human connection. It is about appealing to all the senses and paying attention to all of the touchpoints. Again, consider the Starbucks or the Apple experience — the store ambiance, lighting, style, and how you are greeted by the barista or at the Genuis Bar. The design of the brand experience for the branch bank can attract and engage customers to experience what they can’t achieve through on-line banking. Capital One took this idea to reframe their on-premise brand experience to fit their customer’s lifestyle expectations with the introduction of the Capital One Cafés“The goal was to create inviting spaces where you can go to bank, get answers to your financial questions, recharge your devices, or simply connect with people all with a handcrafted Peet’s® beverage and local pastry in hand.

Capital One Café, Boylston Street, Boston

Design matters

Studies conducted by the Design Management Institute showed that companies committed to design outperformed the S&P 500 by over 200%. While the products and services of the branch bank will continue to evolve to integrate with on-line services it will be how the branch is “packaged” through design that will keep customers physically connected with their bank brand.

At Diverge Branding, a critical component of our approach to problem-solving is the strategic design process that is the avenue to bring brand strategy to life through design. We believe that design is not simply about what is trendy or unique. It’s about the combination of function and aesthetics that make the human connection. We utilize the psychology of how humans respond to sensory stimuli to reflect what the brand aspires to stand for. Whether it is coffee shops, book stores, car dealerships, or bank branches, design can be a key part of the strategy that keeps customers engaged for the long-term — something that cannot be replicated through an on-line experience. Our goal is to bring the brand to life in all of its forms — BrandLife™.

1“Banks Shutter 1700 Branches in Fastest Decline on Record”, Wall Street Journal. 2“Branches in Decline: Last one out turn off the lights” ,The Financial Brand. 3“The Unbanked Generation, A Guide to the Financial Habits of Millennials”, First Data. 4“Do Banks Need Branches in the Digital Age?” The Financial Brand 5”Banking on Value”, Accenture Consulting 6”Majority of Millennials prefer shopping in stores”, Retail Environments. 7”Great Design a Priority for Millennials” , Kelton Research