Brick and Mortar Lives On: Lessons from JP Morgan Chase

‍At GrowthFactor, we are learning everyday on retail trends of industry leaders. In this blog post, we get into a major signal from JP Morgan Chase and want to talk more about why it matters for you and your company. 

JP Morgan Chase announced earlier this year it will open 500 new bank branches in a multi-billion dollar investment to increase their retail presence, seemingly defying the prevailing narrative of “brick and mortar is dead”. 

Why would a company so massive and well-resourced make an investment that, on the surface, flies counter to the broader industry trend of bank closures?

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For answers, we can first turn to the company’s press release from February 2024. A whopping three-quarters of deposits are held by customers who frequently visit brick-and-mortar sites. They also disclosed that they intend to use the branches as a marketing strategy. With 100 locations opening in rural communities coupled with an investment in community-center-style locations and community managers, the bank is sending a signal. They are announcing to the world that their brand is here to help them in person, to connect with them in their communities, and to make their lives easier by being locally driven. In their own words,  “When we open a branch, we’re not only investing in the financial health of residents, we’re committed to the health and vitality of the entire community," said Marianne Lake, CEO of Consumer & Community Banking.

JP Morgan has realized three extremely important truths about human behavior:

1. Physical connection breeds trust

2. Real is more valuable than virtual

3. Convenience is king  

People live in the real world, and despite four years of a global pandemic making virtual conferencing a business standard, many of us have realized that there is no true replacement for a real-world handshake. Nearly 4 in 5 Gen Z shoppers think trust is more important today than it was in the past¹. This holds more broadly as well – 88% of surveyed adults said trust was an important consideration in their decision to buy a brand, with 60% of adults more likely to purchase a brand if they trusted it. Trust pays in dividends and leads to further sales via word-of-mouth referrals, with 67% of surveyed consumers indicating they are more likely to stay loyal and refer others to a brand they trust. Having a physical location for Chase branches allows JP Morgan to let its customers develop relationships with individual bankers while opening up a side of the corporation that is more authentic and organic than the online banking portal.

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A tangible, physical experience feels more valuable than one experienced only digitally. The data reflects this; 57% of all shoppers prefer buying in person, and this trend is interestingly stronger with Gen Z. 61% of Gen Z shoppers surveyed indicated a higher propensity to buy in-person, not counting for the e-commerce sales driven by seeing an item in real life and deciding to ship-to-home. For JP Morgan, this is a no-brainer; people want to be able to talk to a human when they are dealing with a high-value item. This holds true for retail businesses as well; getting personal assistance with a purchase was a key driver of in-person shopping behavior for 46% of surveyed consumers.

Finally, a truth known to all: convenience is king. The rise of e-commerce was largely driven by Amazon’s 2-day shipping guarantee, allowing shoppers to rapidly get items without having to leave the comfort of their own home. Today, nearly 70% of shoppers think about delivery time as a top priority for online purchases². Brick-and-mortar locations take this one step further – you see something you like, you can walk out of the store with it that same day. On a strategic side, physical locations can function as distribution centers, allowing brands to consolidate shipping. Of course, a truly convenient location must be easy to get to and strategically situated to maximize the value for its customers, something that companies like JP Morgan heavily consider when opening a new store. In fact, they did the diligence to understand which markets they wanted to invest heavily in, and which ones they wanted to avoid, because they understand the market can make or break the location.

JP Morgan is being strategic about where it opens a store, and with the shifting market trends, the importance of finding the right site is more important than ever. The perfect site does it all: it creates a hub to build brand awareness and trust, it provides a personal and real experience and serves as a convenient center. To do it all, the location must be situated in the right market, must be easy to get to, and must appeal to the customers who need it the most. JP Morgan is going all-in on real estate by knowing exactly where to play.