Is the run of bank branch closures ending? Maybe.

Over the past decade or so, the banking industry has closed many more branches than it’s opened, both in Indiana and nationwide—but the days of heavy pruning might be coming to an end.

Even in the era of online banking, banks say they still value the physical location, and several are making significant investments in expanding and improving their branch networks.

In the banking industry, “we thought online channels would eliminate the relevancy of the branches, and that’s not the case,” said Deborah Lumpkin, a senior partner at Merrillville-based Centier Bank.

Centier officially opened its 60th office this week, a branch in Brownsburg. The bank also opened two other local offices this year: at East 62nd Street and Allisonville Road in March and at West 86th Street and Ditch Road in July. A few weeks ago, it moved its Carmel office to a larger space.

The Brownsburg branch is Centier’s ninth in the Indianapolis market, and it’s not likely to be the last.

“We are actively looking for some additional strategic locations in Marion County as well as [counties] surrounding Indianapolis,” Lumpkin said.

Citing a 2022 statistic from Ernst & Young, Lumpkin said 82% of people across the generations cite branch presence as a chief factor in their selection of a primary bank. And that, Lumpkin said, means banks still need to have physical branches—even if their customers have moved some of their banking activities online.

Some of the largest banks have also announced plans to bolster their branch networks by opening new offices and renovating existing ones—including some sites in the Indianapolis market.

Since February, JPMorgan Chase & Co., Bank of America and PNC Bank have all announced plans for large-scale branch investments, some of which they say will happen in the Indianapolis area.

To be sure, these banks have done their share of consolidation, with significantly fewer branches in this market than they had a decade ago. But they all say they plan to invest in adding branches and/or updating existing locations here.

And, according to data from the Federal Deposit Insurance Corp., the number of bank branches in Indiana and nationwide increased in 2023 for the first time in more than a decade.

As of the end of last year, FDIC data shows, Indiana had 1,621 bank branches, up from 1,562 in 2022. That marked the end of a 13-year decline statewide, from a high of 2,093 branches in 2009.

A similar trend is in play nationwide: FDIC data shows 69,684 branches across the nation in 2023, up from 69,590 the previous year. Until last year, nationwide branch numbers had declined every year since 2012, when the number totaled 82,461.

The big banks

Charlotte, North Carolina-based Bank of America is, like Centier, actively beefing up its Indianapolis footprint.

The bank entered the market in 2018 with one location. As of June, it had 12 Indianapolis branches, and it’s eyeing additional growth locally.

“[The year] 2026 is going to put us at 26 financial centers in the market,” said Deola Animashaun, Bank of America’s Atlanta, Georgia-based regional consumer executive. “But we will continue to evaluate to see if there’s more opportunity for us to grow.”

The Indianapolis branch openings are part of Bank of America’s nationwide plans, announced in September, to add more than 165 banking centers in 63 markets by the end of 2026. This is in addition to the more than 100 branches the bank has opened over the past two years.

Pittsburgh-based PNC Bank plans to invest more than $1.5 billion to open more than 200 branches and renovate 1,400 over the next five years. Added to the 800 branches PNC has already renovated, that means essentially all of the bank’s branches will have been renovated by 2029.

As of June 30, PNC operated 44 branches in the Indianapolis area, down from 73 a decade ago.

Jeff Martinez, PNC’s New York City-based head of branch banking, said the bank doesn’t plan to open any new branches in Indianapolis. Instead, PNC will focus its branch expansion on markets where it doesn’t yet have as many branches.

But, Martinez said, branch offices in Indianapolis are in line for renovations. “The investment we’re going to make in Indianapolis is substantial.”

Martinez said the renovations are aimed at creating a comfortable “living-room feel,” while also offering spaces for private conversations. That, he said, is because today’s customers are more likely to visit a branch for consultations and advice—perhaps retirement planning, preparing to buy a home or saving for college—rather than the simpler transactions they can do themselves online. “The questions our clients are now coming in to ask are much more advanced.”

JPMorgan Chase & Co. also has announced branch investment plans.

The New York City-based bank, which has more than 4,800 branches nationwide, announced in February that it would open more than 500 new ones and renovate 1,700 over the next three years. Chase described the effort as a “multibillion-dollar investment.”

Chase has 56 branches in the Indianapolis area, down from 83 in 2014.

Drue Anderson, a Carmel-based divisional director for Chase, said the bank is pursuing regulatory approval for a south-side Indianapolis branch with a targeted opening in 2026. The bank is also eyeing Whitestown and two other parts of the Indianapolis area for possible new branches.

Some existing Chase branches will also be part of the 1,700 locations to receive renovations over the next few years, Anderson said.

The bank is “still very much strategically looking to grow here in Indianapolis,” he said.

Another perspective

Even amid all the recent branch investment announcements, financial industry expert Andrew Hovet doesn’t expect to see overall growth in branch networks. Hovet is managing director at Curinos, a New York City-based firm that advises financial institutions.

In fact, Curinos’ data shows that net branch closures are continuing, though by a smaller percentage than in previous years.

From June 2023 to June 2024, Hovet said, Curinos’ analysis of FDIC data showed a 1.4% reduction in total U.S. branches. The total dropped 1.8% the year before, and 3.1% and 3.8%, respectively, the two years before that.

Hovet said the big banks’ branch-opening plans must be considered in light of the branch closures, or “harvestings,” that many of these banks have done in legacy markets like Indianapolis. In other words, trimming their branch networks in established markets allows the banks to pursue growth by opening branches in new or less-developed markets.

“They still have plenty of locations to be very convenient to those consumers in the Indianapolis area so they can operate with fewer branches, operate that market more efficiently, and then take the harvest, the savings from that and go invest in growth elsewhere,” Hovet said.

One example of that is Cincinnati-based Fifth Third Bank, which announced last month that it plans to open more than 200 branches over the next four years. But the bank also said most of these openings will be in the Southeast.

Currently, Fifth Third has just over 1,000 branches throughout its footprint, with 736 of those in the Midwest and 352 in the Southeast. By 2028, the bank aims to increase that branch count to about 1,250, closing about 60 Midwest branches and adding more than 200 Southeast branches to bring those regional counts to 675 and 575, respectively.

A local Fifth Third spokeswoman said Fifth Third does have plans for a few branch openings in central Indiana, but the bank has not announced the timing and locations of those. She said these openings are separate from the bank’s Southeast-focused expansion efforts.

Deeper commitment

Branches are still important to banks, Hovet said, because the physical locations attract loyal customers who bring more deposits to the bank than do online customers.

In the first quarter of 2023, checking accounts opened by customers in a branch had an initial balance averaging $10,598—more than seven times the average balance of $1,457 for checking accounts opened online. That gap shrank over time, but six months after accounts were opened, the average balance for those opened in person was still 2.5 times larger than that of the online accounts.

Similarly, Hovet said, 76% of the checking accounts opened in a branch were still open 12 months later, compared with only 47% of accounts opened online.

Part of the reason for the disparity, Hovet said, is likely generational—younger people are more likely to open online accounts, and they’re also more likely to open smaller-balance accounts. But the other half of the picture is that customers who begin their banking relationship online are less likely to be fully engaged with the bank, and thus less likely to become loyal customers.

Plus, Hovet said, closing a branch means potentially losing out on the new customers who would have come to the bank through that branch. “Because you don’t have that facility there, sometimes people will no longer choose you as their bank, and they’ll choose someone else who maybe is more convenient.”•