Washington takes center stage in bank
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[December 12, 2018]
By David Henry
WASHINGTON (Reuters) - JPMorgan Chase & Co
<JPM.N> 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, JPMorgan 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 JPMorgan considers the region
the third biggest in the country by population and gross domestic
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. (Graphic: https://tmsnrt.rs/2SCaVzC)
"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."
JPMorgan 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 <WFC.N>, 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
Capital One Financial Corp <COF.N>, 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.
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A view of the exterior of the JP Morgan Chase & Co. corporate
headquarters in New York City May 20, 2015. REUTERS/Mike Segar/File
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 JPMorgan wanted in the well-to-do
Georgetown area. Capital One reportedly paid $50 million to buy the
entire building. JPMorgan opted for a small store-front a few doors
away where it can have a prominent sign, space for bankers and the
"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.
(http://reut.rs/2a7GEEH) Plus, new regulations make branch deposits
more valuable for the biggest banks.
A sense of urgency has come as rising interest rates make customer
service matter to keeping people from taking their deposits
The battle between banks is not limited to Washington.
JPMorgan 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 <BAC.N> has moved into Pittsburgh, Denver and
Minneapolis. PNC Financial Services Group Inc <PNC.N> is moving into
Dallas and Kansas City with incentives for online accounts backed by
a few small branches.
(Reporting by David Henry in Washington; Editing by Lauren Tara
LaCapra and Lisa Shumaker)
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