J P.Morgan Chase & Co has made a splash this year in Washington, D.C. opening branches for the first time in the nation's capital. Smaller branches, ATM kiosks and mobile phone apps are allowing the bank to go into markets more quickly and for less money now than five years ago, J P.Morgan executives said.
Banks can venture out now because they have cleaned up regulatory problems since the 2007-2009 financial crisis. President Donald Trump's tax cut left them with cash to invest. Washington is a prime battle ground, and J P.Morgan considers the region the third biggest in the country by population and gross domestic product.
No bank dominates. The top three hold between 14 percent and 17 percent of deposits in the region, compared with Chase's 32 percent share in the New York City area. "If you want to be the premier American bank you want to be in all of the key cities," said Ken Thomas, a branch location consultant.
Washington offers banks the chance to build brands and make life-long national customers from people passing through as students or employees of changing governments "You have a microcosm of America here in D.C.," said Thasunda Duckett, the CEO of Chase Consumer Banking. "It is booming and it is a place we have always wanted to be."
J P.Morgan executives plan to build 70 Chase branches in Washington and Baltimore. Five years ago they probably would have set out to match the 150 Washington branches of Bank of America one-for-one. Instead, they expect to make up the difference with 150 ATM locations and their mobile phone app and website.
Competitors include Wells Fargo & Co, which is No. 3 in Washington by deposits. Wells Fargo has been moving some branches from prime corner locations to smaller store fronts a few doors away. Bank of America, to protect its No. 1 position, has been remodeling offices with new ATMs and rooms for video conferencing with loan specialists.
Capital One Financial Corp, which is No. 2, is taking a different tack. The bank, which acquired one-time market leader Chevy Chase Bank and its 217 branches during the financial crisis, is closing branches and was down to 126 in June. It is opening up hybrid "cafés." They are legally not branches and subject to approval by regulators. But they have ATMs, Wi-Fi connections to the Capital One app, and bank employees for customers to ask about problems and opening accounts online.
Capital One is putting a café at a prime corner J P.Morgan wanted in the well-to-do Georgetown area. Capital One reportedly paid $50 million to buy the entire building. J P.Morgan opted for a small store-front a few doors away where it can have a prominent sign, space for bankers and the latest ATMs.
"We feel really great about this location," said Duckett. The success or failure of the strategies could separate profit winners from laggards. Physical locations, including staff, real-estate, and handling checks and cash, are a big expense.
A sense of urgency has come as rising interest rates make customer service matter to keeping people from taking their deposits elsewhere. The battle between banks is not limited to Washington. J P.Morgan has also moved into Boston and Philadelphia - glaring East Coast gaps in the branch network of the New York City-based bank.
Bank of America Corp has moved into Pittsburgh, Denver and Minneapolis. PNC Financial Services Group Inc is moving into Dallas and Kansas City with incentives for online accounts backed by a few small branches.
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