Here’s a fun fact: one of the most popular articles on Finledger is our story on banks going branchless.
And yet, we just wrote a story on Citizens Financial Group acquiring Investors Bancorp, with Citizens touting that the acquisition will add “154 branches located in the greater New York City and Philadelphia metropolitan areas and across New Jersey.”
So why is Citizens bucking the branchless trend? I have two hunches:
- U.S. banks are well-positioned to commingle offline and online experiences.
Digital banking has taken off in countries where large segments of the population never had a physical branch near them to begin with.
For startups like NuBank, which offers banking services in Brazil, that left a gaping hole for digital-first banks to fill. In general, most of the U.S. population has always had access to a physical branch.
- The Apple Store Strategy.
Citizens noted in its press release that its franchises will be in “attractive retail and commercial banking markets in the United States characterized by large and dense population centers, areas of high-income households and centers of robust business activity.”
Sound familiar? That’s because Apple’s retail outlets are located in similar areas, and it’s an approach to reaching customers that has led to greater brand loyalty, upsales, and, of course, revenue.
Of course, commingling offline and online experiences is difficult. Community banks and credit unions persistently struggle to build out digital experiences that are on par or exceed digital banking equivalents.
And furthermore, the Apple store strategy has been played out by Microsoft, Google and others, all of which have given up on maintaining a physical presence.
Finally, the coronavirus has not been stomped out, and Citizens Bank’s newly acquired franchises are in densely populated areas that are more likely to reconsider mask mandates, an ideal environment for neobanks to continue demonstrating their value.