Many of the headlines in the wake of J.P. Morgan’s investor day fixate on the news that the banking giant plans to close hundreds of bank branches. On the face of it, that is factual. But this is akin to focusing on layoffs without accounting for hiring in other parts of a company that can drive future growth and employment. 

The reality is Chase’s news is an example of getting leaner, not lopping. And it points to the bank’s strategy to boost profitability by reinventing the branch of the future, playing more of an advisory role, and spurring customer engagement through digital channels. To be sure, Chase does forecast reducing its 5,602 branches, but only by about 300 over the next two years. But Chase also sketched out its strategy to target expansion in promising areas like San Jose and evolve its branches from “transaction centers to advice centers.”

Look for its branches to increasingly set aside private spaces for face-to-face interactions between advisers and business, commercial, and private banking clients. An important part of this strategy will hinge on reducing the number of tellers and assistant branch managers who handle routine transactions.

What’s going to happen to those routine transactions? Customers increasingly will conduct them online, on smartphones, on tablets, and at ATMs.

Will they do it because Chase leaves them no alternative? Nope. They’ll do it because they prefer the digital channels.

Citing year-over-year numbers, Chase reported hefty increases in mobile app users (20%), mobile QuickDeposit transactions (25%), mobile QuickPay transactions (80%), mobile bill payments (30%), and ATM deposits (10%). And here’s an important milestone for Chase’s branches and ATMs: 2014 marked the first year its customers made more deposits through digital channels than at teller windows (ATMs 48%, mobile deposit 10%, and tellers 42%). Like Javelin and our view about Moneyhawks, Chase concludes that digital usage leads to more engaged, more satisfied consumers who are less likely to switch banks. They do more transactions, and they conduct them in cost-effective, self-service digital channels. And when they do head to a branch, there will still be plenty of them – with an increasing focus on face-to-face interactions that matter both to the customer and Chase’s bottom line.


About Mark Schwanhausser

Mark strategizes how financial institutions can track and serve customers across the channels they use, and provide a consistent, integrated brand and user experience. Mark helps banks and credit unions profitably enable customers to monitor and manage their money more intelligently through technology such as online banking, mobile banking, personal financial management, financial alerts, and technologies on the horizon. 

Mark led the development of Javelin’s Digital Banking Maturity Path, a strategic framework for assessing a financial institution’s ability to deliver advice in digital channels, and the Financial Journey Model, which builds digital banking on a foundation of time-tested personal finance principles. He has also mapped out strategies to upgrade online banking, digital account opening, and financial alerts in a mobile-first era. 

Before joining Javelin, Mark was a personal finance reporter for the San Jose Mercury News. He covered money and emerging trends in financial services and payments technology.

Mark has a bachelor’s degree in journalism from the University of Missouri at Columbia and attended Antioch College.

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