Why JPMorgan Chase Is Banking on Opening 500 New US Locations

JPMorgan Chase (JPM) plans to open 500 new banks in the U.S. in the next three years, reinforcing its commitment to expanding retail bank and financial service locations that it outlined in 2018 and emphasized last year would be a key business priority.

The largest U.S. bank said the new locations would push it into several new markets, including lower-income and rural communities with historically lower access to retail banking services. In addition, it will renovate 1,700 banks and hire 3,500 workers to enhance its customer service efforts.

Chase already operates the largest branch network in the U.S., having added 650 branches in the past five years, including 400 locations in 25 new states.

Betting on Branches

Back in May, JPMorgan Chase pledged at its annual investor day that expanding its retail branches would be a key business priority for the firm. The company noted at the time that Chase accounted for one in every $9 deposited in U.S. banks in 2022, up from about one in every $11 two years earlier.

While banking customers in the 21st century increasingly use online services and mobile apps to conduct bank transactions and access other services, about three-quarters of Chase's deposits sit in accounts of customers who still regularly visit the bank's brick-and-mortar branches.

The new locations will increase the number of those branches to about 5,200 in 48 states and the District of Columbia. Currently, the bank serves about 80 million customers and 6 million small businesses.

Deposit Drawdowns

The move to expand branches notably comes as U.S. bank deposits have experienced historic declines.

U.S. bank deposits peaked at $18.2 trillion in March 2022, just as the Federal Reserve began raising interest rates to combat inflation. As yields on cash investments climbed along with rates, more customers shifted to deposit alternatives, such as money-market funds.

The regional banking crisis in spring 2023 exacerbated deposit drawdowns. By May, bank customers had withdrawn $1 trillion in deposits from the March 2022 peak. Deposits since have stabilized, ending 2023 at $17.6 trillion.

Halting the deposit drain may not alter the longer-term trend of branch closures, however.

JPMorgan Chase remains the industry's primary exception in adding branches. The total number of U.S. commercial bank branches fell below 70,000 (69,905) at the end of 2022 for the first time since 2003, down 16% from an all-time high of 82,965 a decade earlier.