Why are banks building so many new branches in Massachusetts?

CBS News

a day ago

With money sending apps and online banking, why are so many new bank branches popping up in Massachusetts?
Ever spot a "Space Available for Lease" sign and hope a new café, bookstore or restaurant is coming to town? Excitement builds and then you learn... it's another bank? It seems to be recent trend in banking and now it's happening in Massachusetts.
In Needham for instance, a town of about 32,000 people, there are nine bank branches. One of the newest is a Chase Bank that replaced a convenience store which had replaced a Friendly's restaurant.
"I was hoping it would be a restaurant," said Eileen Baker, who owns Proud Mary, a gift and fashion boutique in the heart of Needham. "We would love to see little coffee shops; I know a lot of people would love to see a bookshop in Needham. Little specialty foods."
Baker and many other small business owners thrive when people are drawn downtown by new specialty shops and restaurants. Banks, not so much.
Chase opening 50 new branches
With mobile banking and Venmo, physical banks might seem outdated. But Chase, the country's largest commercial bank, plans to open 50 new branches in the state by 2027, including brand-new branches in towns like Sudbury and Weston.
"I don't really understand why there are so many banks," said one young man outside of the under-construction Chase in Sudbury.
Opening in wealthy neighborhoods
Good question. So, we asked Eric Rosengren, former President of the Federal Reserve Bank of Boston.
"They would only do it because its cost effective," Rosengren said. "You don't see it in lower income neighborhoods. You see it in wealthy neighborhoods, because even a few wealthy individuals can provide a significant amount of income coming from the wealth management."
Rosengren says these often-plush new branches are designed to attract affluent customers who might still value face-to-face financial advice.
Recent surge
This surge is a very recent shift. In fact, nationwide, the total number of bank branches has dropped by 13,000 in the last decade. In 2014 there were about 81,000 U.S. bank branches. In 2023 - for the first time in a long time- there was an uptick in new branches- leaving about 68,000 branches.
Will the trend continue? Most research says younger customers are using mobile banking and very seldom visit their local branch. Will they change their minds once they begin to accumulate wealth? Sound like some financial companies are banking on it.
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