Best Branch Network

Summary Analysis

igger isn’t always better when it comes to branch networks, especially in the digital age. But it’s the bank with the largest branch network—Wells Fargo & Co., with more than 6,000 branches across the U.S.—that came out on top in Bank Director’s ranking for the best branch network. Given its recent scandals, where millions of unauthorized accounts were opened on behalf of unsuspecting customers, one would think that a betrayal of trust on that scale would result in a significant decline in business.

Up to this point, at least, that hasn’t been the case for Wells Fargo. The bank has reined in its high-pressure sales culture since the scandals became public in late 2016. Under the leadership of its new head of community banking, Mary Mack, Wells Fargo has eliminated product sales goals, instead introducing incentives that focus on the customer experience. And the scandal appears to have done little to damage its reputation, at least with current customers—core deposits grew 7.7 percent from June 2016, before the scandal became national news, through June 2017, according to the Federal Deposit Insurance Corp. Wells Fargo was opening fewer new accounts, however, as of a February 2017 company report, a sign that the scandals may have had a chilling effect on prospective customers.

“A lot of banking is still personal,” says Jim Miller, senior director of banking services at J.D. Power. Customers who have a good experience with their banker in the branch are less likely to leave, even given a scandal as broad in scope as Wells Fargo’s was. Wells also offers a consistent branch experience. “From a branding perspective, their branches always look good,” he says. The bank also leverages that service and consistency with innovation, such as the cardless ATMs that the bank introduced in 2017, which allow customers to withdraw cash through the Wells Fargo mobile app.

To determine which bank of the 10 largest in the U.S. has the best branch network, we examined deposit growth and the efficiency of each bank’s branch network, calculated as deposits per branch and revenue per branch. The accuracy of Wells Fargo’s call report data wasn’t impacted by the scandal, as that issue centers on the number of accounts generated by the bank’s sales staff, not the dollars deposited. Additionally, we consulted with industry experts, conducted on-site visits to bank branches and opened accounts to better understand each institution’s approach.

Wells Fargo didn’t lead in any one metric in the best branch network category. BB&T Corp. and TD Bank exhibited the highest levels of deposit growth, and Citigroup and Capital One Financial Corp., which both have the smallest branch networks, are the most efficient. But Wells Fargo demonstrated the best balance of growth and efficiency in 2016. Its branch network also scored well in our mystery-shopper survey and was singled out by several industry experts.

While not a factor in the ranking, Wells Fargo’s vast network is a strategic advantage. “They have the only real retail coast-to-coast franchise,” says Marty Mosby, director of bank and equity strategies at Vining Sparks.

They also provide all the services a customer could need. “They’ve built a one-stop shop with the most locations across the country.”

TD Bank scored second in the branch network category. In addition to scoring high in its level of deposit growth, TD scored well in Bank Director’s on-site study.

Despite rating first with Bank Director’s panel of experts, JPMorgan Chase & Co.’s scores for deposit growth and efficiency were moderate, dropping the bank’s ranking to third. Capital One Financial Corp. ranks fourth, rating particularly well for efficiency. Bank of America Corp., at fifth, and U.S. Bancorp., at sixth, didn’t stand out in any of the category metrics for their performance, though Bank of America rated highly with our expert panel.

BB&T scored seventh in the category, despite posting strong deposit growth as a result of its acquisitions of National Penn Bancshares, in 2016, and Susquehanna Bancshares and Bank of Kentucky, both in 2015. Still,
its branch network was the least efficient.

Citigroup’s branch network was the most efficient, but the international bank scored eighth due to a weaker level of deposit growth. PNC Financial Services Group and SunTrust Banks scored ninth and tenth, respectively. Both rated poorly for efficiency. PNC also posted weaker deposit growth numbers, but did score well in Bank Director’s site study for its customer experience. SunTrust posted deposit growth metrics that were middle-of-the-road compared to peers and wasn’t recognized by our expert panel.

How They Ranked

Did You Know?

e may be living in a digital age, but the branch still matters. Most transactions can be handled through online or mobile channels, but customers still want to meet with a banker for financial advice, to deal with complex financial issues or to solve problems. Despite the convenience that technology provides, sometimes customers prefer the human touch.

Given shifts in consumer behavior and pressures on profitability, the biggest banks have been rethinking the branch and its role in serving customers. With branch traffic declining, the industry has reduced branch locations by 3 percent over the past decade, according to S&P Global Market Intelligence, and the 10 largest U.S. retail banks have trimmed some 3,152 branches—a decline of more than 10 percent.

These banks have been following the money, opening branches in growing metropolitan areas and shuttering those in rural communities. “They want their brand out front and in person in a store, so that’s where they get the biggest bang for the buck,” says Sean Keathley, president of Atlanta, Georgia-based design firm Adrenaline Agency.

With fewer customers doing business in-person, branches have also been shrinking: The average size of a newly constructed bank branch declined by 23 percent from 2006 to 2016, according to a study conducted by Birmingham, Alabama-based bank consulting firm Bancography. Banks like Wells Fargo & Co., TD Bank and PNC Financial Services Group have even experimented with micro branches, which focus on self-service and require minimal staff, deploying sales associates with iPads rather than traditional, behind-the-counter tellers.

The branch isn’t dead, but for the biggest banks, it has been getting a makeover through the use of technology to gain efficiency without sacrificing the customer experience.

Bank of America Corp. opened a few employee-free, fully automated branches in early 2017. They’re a lot smaller than the average branch, and will house ATMs and enable customers to talk with Bank of America employees via video conferencing. And in its more traditional branches, bank staff encourage customers to use digital channels for transactions to ultimately free up employees to focus on sales to feed the bank’s bottom line.

ATMs are getting smarter and more customer-friendly, as well. Interactive ATMs like Bank of America’s require a lot of up-front investment, says Steve Reider, founder and president of Bancography. Banks should also ensure that the customer is still satisfied with their experience in the branch and tread carefully when it comes to automation. “There’s a lot of ways you can bank remotely already,” says Reider, including online and mobile channels, call centers and ATMs. If a customer still chooses to drive to a branch, “I think they’ve sent a pretty resounding signal that they’d like to see a human,” he says.

In an example of mobile banking working seamlessly with the branch channel, Wells Fargo recently unveiled its cardless ATM, which uses the bank’s mobile app. Customers enter an access code instead of inserting a debit card and then enter their PIN number to withdraw cash. “Every time a customer walks up to an ATM or into a branch, chances are they’re carrying a phone, and we believe the real power of mobile is the ability to enhance the customer experience at our ATMs and branches,” said Jonathan Velline, Wells Fargo’s head of branch and ATM banking, in a March 2017 press release.

Bank of America rolled out its cardless ATM in 2016. The bank is also one of a small number of banks that offer appointment scheduling within its mobile app. A customer can pick a convenient time to visit a local branch, and let the bank know what financial matter they want to discuss. “When [customers] come to the financial center, we’re in better shape to serve them,” said Bank of America CEO Brian Moynihan in a July 2017 earnings call. Wells Fargo and BB&T Corp. also offer this feature.

Does this shift to automation and away from traditional bank tellers mean that banks will be investing in fewer personnel as the investment in technology increases? Perhaps not. JPMorgan Chase & Co. CEO Jamie Dimon expects his bank to hire more staff over the next two decades, not less, he said in an interview with the social media network LinkedIn. Those include technology hires, like coders. “We’re using bots today, [but] it’s not going to stop us from opening retail branches,” he said. “We’ve got all these growth opportunities, and we’re always finding ways to be more efficient. But creating more efficiency creates capital, creates other opportunities.”