The Future of Bank Branches

Headquarters of Monte dei Paschi di Siena

The Changing Role of the Bank Branch in Digital Retail Banking

One of the top global banking stories this month is the competition to acquire Monte Dei Paschi di Siena (MPS), the oldest bank still in operation today, with 1,550 branches in its network. Banco BPM and Intesa SanPaolo are competing to acquire the venerable bank, which was rescued by the Italian state in 2017 and has since acquired Mediobanca and grown into the third-biggest bank in Italy.

Under Intesa SanPaolo’s bid, half of the MPS branches will be sold off in order to avoid anti-competition laws. There’s plenty of life in the branch still! And while the number of bank branches across the world probably peaked about ten years ago at around 750,000 branches, reports of the death of the bank branch are greatly exaggerated.

The strategic rationale for bank branches is changing, but the local connection remains a powerful force. Not only do customers have greater trust in banks with a local branch, but they’re more inclined to open a digital account with a bank that has a local physical presence. Adding robust digital distribution to physical locations is proving to be a successful strategy. In some places the bank branch network is continuing to grow. Do recall that the global population is still rising!

There are a few big trends affecting how branches operate and what services they provide. Globally, over-the-counter transactions in cash or cheques have dropped by almost half over recent years while digital and mobile payments have grown. At national and regional level new payment systems (such as PIX) have transformed payments and helped move them from the branch. At the same time there’s been great growth in new onboarding methods, from fully digital onboarding through mobile phones to agents to newly designed banking kiosks.

But the oft-predicted disappearance of the bank branch has yet to happen. Some of the world’s most successful banks – from the US to South Africa – including those that are far advanced in terms of digitalisation are in fact continuing to grow their branch networks, helping them gain new customers and deposits. The strategy of branches is changing, towards higher-value services, but there are differences by region.

Branch expansion in the US: led by giants

Let’s start with the US. If you had to guess, would you say the branch network in the US is growing or shrinking? The National Community Reinvestment Coalition reports that the full-service branch network grew in the last two quarters to April 1 2026, the first back-to-back expansion in the last 15 years.

The US has a vast network of community banks with single branches or small branch networks, which are deeply embedded in local communities. But after a decade or more when the national branch network has been shrinking by about 10 per cent, the branch network is starting to grow again. JPMorgan Chase and Bank of America are among the major banks that see the branch as a critical tool in deposit mobilisation, in entering growing markets and in developing their client advisory services. (It’s worth noting that JPMorgan Chase calls its retail division ‘community banking’.)

Europe’s branch network is still huge

In Europe, new bank customers find a wide range of digital-only banks but also a wide range of traditional banks with large branch networks. Santander, with a global network of branches, has had great success with digital adoption, and is now calling itself a ‘digital bank with branches’. As demand for transactions in branches dropped, Santander converted over 200 of its existing branches into Santander Work Cafés, starting in Chile. The Work Cafés offer customer discounts on drinks and allow them to book meeting rooms. The bank found that the cafes brought in new customers who liked the concept and then decided to open an account.

Research from BBVA suggested that customers were more likely to open a digital account if there was a physical branch somewhere in the neighbourhood. BBVA said that it helped its branch staff move from being ‘experts in transactions’ to ‘experts in finance and technology’, recognising that many customers appreciate branch staff helping them adjust to banking that is increasingly digital.

Africa has added agency banking to branch banking

In sub-Saharan Africa, banks have built out networks of agents that take deposits in cash or offer cash from accounts in the absence of branches and ATMs. That’s complemented by growing ecosystems where banks collaborate with mobile money operators, often providing the capital for mobile money lending. Many African banks plan to move branches to higher-value transactions, trade finance, and MSME advisory services, along with higher-value retail banking services including wealth management.

Leading retail bank Capitec, now one of the most valuable banks in all of Africa, regularly moves and updates its branches as it grows its customer base. Its early success grew from a focus on distribution and making life easy for its customers, and it has never abandoned that strength. In several African countries, newer banks tend to have far fewer branches than existing banks, and those tend to be flagship-type offerings that work hand-in-hand with strong digital services. This is often in countries where regulators are not yet widely issuing licences for purely digital banks, even though digital payments services are being widely accepted.

In the Middle East, it’s tech plus branches

In the Middle East, we see branches moving from standard retail offerings upwards to premium or outwards to more public and open outlets. States are investing heavily into digital transitions, so there’s been a drop in traditional retail outlets and a shift towards people being deployed to serve premium clients in wealth management and advisory services, with branches being converted to lounges. Once again, we see a shift to smaller kiosk-type branches operating in shopping malls or high-footfall areas, and staff being re-trained as hybrid bankers, offering longer service hours through video calls.

Latin America’s shift is driven by PIX and co

In Latin America, there’s been a huge shift from cash towards digital transactions, which reflects global shifts towards national digital payments networks. PIX in Brazil has been a spectacular success, Mexico is embracing digital banking (if mostly in urban areas) and digital wallet adoption has surged in Colombia and Peru. Branches are becoming bigger or smaller, with banks closing a lot of smaller retail branches and instead rolling out mini-branches or kiosks in shopping malls and supermarkets, which serve to onboard customers and issue debit cards. Banks are also investing in larger flagship branches, for brand visibility and to offer higher-value services. Where the branch’s biggest feature was once its cash-laded safe, it’s now becoming a tech showcase. Latin American bank annual reports stress the trust premium of branches, particularly with lower-income and older customers who prefer to trust their live savings to banks with a local physical presence.

China’s world-leading payments tech is shifting to the branch

In Asia, there’s a vast divergence in branch strategies. China, global home of robotics, AI-powered kiosks offer customers a wide variety of services or customers can go to an unmanned branch. In India, as the middle class grows rapidly, leading banks are growing their branch networks to capture new business particularly in the smaller cities. In Singapore, OCBC’s ‘FRANK’ branches resemble high-end clothing stores. DBS, with a reputation for excellent digital services, has moved its branches towards high-value advisory services. In Southeast Asia, the kiosk concept is very popular – so it’s no surprise that South Africa’s GoTyme picked the Philippines for its first overseas market.

The annual reports of banks indicate that the physical branch remains an irreplaceable asset for driving brand loyalty and closing complex financial products. But as banks transform into players in a broader digital ecosystem, the survival of their branches rely on the bank’s ability to smoothly integrate its branches into this new world.

While Monte Dei Paschi is the oldest bank still in operation, it was not the first modern bank in Italy. That honour goes to the Banco di San Giorgio, which opened in 1407 in the bustling merchant town of Genoa, Italy. Christopher Columbus (1451-1506) was among its customers. Banco di San Giorgio went out of business in 1805, though its elaborately decorated headquarters survives to this day as the Palazzo San Giorgio. Will we ever see a new branch as elaborate as that?

Genova – Palazzo San Giorgio visto dal Bigo – Palazzo San Giorgio – Wikipedia