Unbundling and Branch Growth Redefine Banking Norms
In recent discussions about the future of financial services, two editors have challenged prevailing narratives about banking trends, suggesting the industry may be misjudging where customer relationships are truly heading.
Unbundling Over Primacy
Banks have long pursued a strategy of becoming a customer’s single primary financial institution, offering deposits, lending, cards, investments, and payments under one roof. However, one editor argues this approach may be outdated. Customers are increasingly selecting providers based on specific use cases rather than loyalty to a single institution. The trend of unbundling banking services has encouraged this behavior, and while financial services may be moving toward rebundling, customers still prefer the best provider for each financial need.
For example, the editor uses Wise for international money transfers, recognizing its strength there, but does not expect it to excel in other areas like investing. This highlights a key point: expanding product offerings does not automatically create customer loyalty or deeper relationships. While entering adjacent businesses can make sense when products complement existing strengths, doing so merely to capture more of a customer’s wallet can introduce complexity, increase costs, and dilute what made the original offering valuable. More importantly, it may push firms into businesses they are not well-suited for.
The Enduring Role of Physical Branches
Contrary to the narrative that physical bank branches are becoming obsolete, another editor points to data showing a resurgence in branch usage. The number of U.S. bank branches has increased for the first time in 17 years, with roughly 120 net new branches added over the last three quarters. This growth occurs even as digital banking adoption rises, with 64% of banking consumers still relying on branches for conflict resolution when online channels fail. Complex issues like mortgage disputes or high-stakes financial decisions often require face-to-face interaction, where trust and human judgment are vital.
Large institutions like Bank of America, which has over 50 million active digital users, are expanding both digital and physical footprints. Regional banks such as PNC, Truist, and Fifth Third are also growing their physical presence in high-growth markets. The role of the branch is evolving from routine transaction processing to handling situations that demand trust, reassurance, and human expertise. As artificial intelligence automates more routine interactions, the moments requiring genuine human involvement may become more valuable, not less.
The Editors’ Room Podcast Explores Banking Trends in Informal Discussions
The Editors’ Room (TER) is a new podcast series featuring Editor-in-Chief Zack Miller and Managing Editor Sara Khairi discussing behind-the-scenes conversations about major financial stories. The format avoids rehearsed interviews, instead presenting unscripted exchanges where the editors challenge each other’s perspectives.
Episodes focus on real-time analysis of industry developments, such as the second installment examining trends the financial services sector either overestimates or overlooks. The conversational style emphasizes spontaneous dialogue over structured presentations.
Complementary Channels and Strategic Focus
The two perspectives converge on the idea that banking may no longer prioritize owning all customer financial relationships. Instead, success may hinge on identifying where a firm is indispensable within its ecosystem. This could involve leveraging trust, data, security, distribution, familiarity, or exceptional expertise in a critical area. For some, that strength lies in digital platforms; for others, in physical locations that provide reassurance during complex or sensitive situations.
