The trend among some banks has been to shutter real estate — i.e., branches — amid the mindset that customers are moving away from bricks and clicks and towards online banking.
JPMorgan Chase & Co., noted Reuters, has been taking a different tack. The bank has maintained over the past several years — over the criticism of some sell-side and other analysts — that branches have a valued strategic function: They can serve as constant reminders of the brand and can also cater to the preferences of people who want to make transactions in person.
The newswire reported that the firm has been able to grow its deposit base over the last several years at a rate that has outpaced its major competitors and that is, according to Bernstein Research, on pace to be twice that of the banking industry itself.
Looking at annual data, the total deposits with Chase’s consumer unit were up 11 percent last year, to as much as $607 billion at year-end. That could translate into strong net income leverage if the funds can be lent out at higher rates as interest rates grow. As has been widely noted, the incoming Trump administration is looking to boost stimulus (therefore, inflation will rise and rates will rise, too), with tax cuts and a tidal wave of federal spending, for example, on infrastructure projects. The key question is whether loan demand will grow or whether rates will be so high that there will be a bidding war of sorts for consumer deposits.
In recent months, the firm has been active with promotions geared toward gaining more deposits, with, for example, $500 cash to accountholders with at least $15,000 held in a savings account for three months. That comes against a backdrop where returns on consumer deposits have been at about 1.8 percent recently, whereas, five years ago, that rate was 2.7 percent. JPMorgan, along with other banks, has been focusing on customer service to help retain and attract more deposits, along with new outreach to affluent customers, especially those pegged as “mass affluent.”