When you imagine the bank branch of the future, what does it look like? Would it be in a bustling downtown area, or a quieter suburb? Will it still occupy a large, ornate building or could it fit inside a repurposed shipping container?

Recent bank branch closures in the Mid-Atlantic have created opportunities for banks to embrace innovation and refresh their approach to in-person services. Yes, digital platforms and capabilities are more critical than ever. But for many banks and credit unions, branches still play an important role–and their spaces are getting an overhaul to meet the needs of tomorrow’s customer.

Location, location, location

 When it comes to envisioning the bank branch of the future, one of the most important considerations is location. Banks are increasingly looking beyond the congested downtown districts of major cities and making a concerted effort to build branches where they will be most accessible and convenient to customers.

For example, earlier this year, JPMorgan Chase announced an ambitious expansion plan that included areas surrounding Boston, Charlotte, Philadelphia, Washington DC, Charleston, and Richmond. Chase has opened 28 new branches in the Philadelphia region since 2018–including several this year, despite the challenges posed by COVID-19. Among the 50 new branches in total planned for the area, many are in suburban locations like Haverford, Newtown Square, Media, Wayne, Norristown and Doylestown. 10 of the new branches will be in low or moderate income areas. Chase also noted that with more of its customers conducting everyday transactions via digital channels, bankers are devoting more of their capacity to cultivating customer relationships. A worthwhile value-add given, despite the growth in online banking, more than 30 million households had visited a Chase branch in the previous year.

The rise of the micro branch

One of the reasons bank branches aren’t in danger of extinction is the network effect–the phenomenon by which increasing the number of branches in an area tends to result in capturing a disproportionately large share of market deposits.

According to Level 5, a design-build firm that specializes in retail bank and credit union branches, a bank doesn’t need to saturate the market with full-size, full-service branches in order to activate the network effect.

A “micro branch” has a smaller footprint than a traditional branch, is heavily branded, and features a mix of smart technology and human professionals. A micro branch could be as compact as “a converted shipping container equipped with an ATM and a universal banker office,” or as robust as a 1,500-square-foot freestanding branch equipped with video tellers, ATMs, and a few on-site staff members.

Citizens Bank, which operates in Mid-Atlantic states Delaware, Pennsylvania, New York and New Jersey, is actively investing in smaller branches staffed with more versatile professionals. Specifically, the company’s vision is for its branches to function as “advice centers.” Rather than  visiting a branch to complete a transaction that could be done more efficiently online, customers will go there for financial guidance, said CEO Bruce Van Saun in a recent interview with American Banker. Some employees of these new, smaller branches will be trained to provide a broader range of services and support, while others will specialize in areas like wealth management and small business support. Some will work at the physical branches, while others will work remotely from virtual locations.

As banks and credit unions look to the future — and rethink their physical footprints in tandem — digital transformation remains an imperative priority.

According to Forrester’s Global Financial Services Architecture Survey, conducted in Q3 of 2019, nearly 80% of banks reported not having the technology they needed to provide great customer experiences. The COVID-19 pandemic has accelerated digital innovation out of necessity by forcing banks to adapt to remote work and a higher demand for online banking capabilities.

But physical branches remain a crucial component of the banking equation, and the organizations that thrive will be the ones that evolve every aspect of the customer journey–both online and off.