Big Banks Adopting a Credit Union Tactic

Yesterday’s Marketplace program on NPR had a brief report on the investments two of America’s five largest banks are making to improve their competitive position.

Technology?  New Ventures? Greater staff skills? Social Marketing Influencers?  Third party-fintech-origination partners?  More acquisitions?  All are factors, but not the newest priority.

The New-Old Strategy

JPMorgan Chase announces brick-and-mortar bank expansion in a digital age

Several of the relevant paragraphs from the story:

In the year 2024, when you think banking, you think mobile apps, online deposits, digital future, right? Not so fast. JPMorgan Chase, the country’s largest bank, announced today it’s opening more than 500 new brick-and-mortar branches and renovating another 1,700.

This follows an expansion by Bank of America last summer. So, what’s the value of banking in person in the digital age?

You don’t usually think of a bank as having a living room. But Jason Patton of JPMorgan Chase says they’ll be a staple in a handful of the bank’s new branches, which are meant to be places where people chat. . . (in cu’s this is called serving members)

“Some of these branches, we’re opening up in places where we’re not as well known,” he said. “So, in many cases, people don’t know what we have to offer.”

And it’s important to see and be seen by those people if banks are going to drum up new business, said Jaime Peters, a finance professor at Maryville University in St. Louis.

“By going and building these new branches, and having that placard on the side of the road that people pass every day, that is brand awareness, that is trust building,” she said. . .

The Only Growth Option Is Organic

Big banks have another incentive to add branches: The ones that hold more than 10% of the nation’s deposits are generally prohibited from acquiring other banks, said Michael Rose, a managing director in equity research for Raymond James. 

“So because you’ve removed the ability for them to actually acquire other banks, they have to grow essentially organically,” he said.

The Credit Union Counter: Enhancing “Their” Local Environment

After posting the latest video from White Fish CU,  I received a link from Jason Lindstrom CEO of Evergreen CU in Maine.  This new video  has a similar community theme, but different subject matter. It is an homage to Maine’s forests and the people who maintain and enjoy them.

In addition to branches,  “local” means that  a credit union is authentically “home-grown,” not merely a local outpost of an out-of-state or national financial firm.    Bank of America or JP Morgan Chase branches are not being grown (drummed up) from the natural environment.  Rather they are an invasive species, trying to replace the local habitat.

This is Evergreen’s mission, “keeping Maine wild.”


Leave a Reply

Your email address will not be published. Required fields are marked *