Jamie Dimon always wanted to create a truly nationwide bank, one that stretches to all 48 states in the contiguous United States.
This fall, if all goes according to plan, the JPMorgan Chase chief executive will have pulled it off.
The concept was ambitious, maybe even crazy, when Dimon announced plans in January 2018 to open 400 Chase branches in new markets over five years — starting with Boston, Philadelphia, and Washington. It’s even more ambitious, and maybe even crazier, during a pandemic that has accelerated the ongoing shift to digital banking.
During a visit to Boston last week, Dimon chatted about the rollout, and conceded that he worried about the new branches’ profitability, particularly in markets such as Boston that have firmly entrenched competitors.
“But we’ve been doing fine, much better than we thought,” Dimon told the Globe.
JPMorgan Chase has opened nearly half of those promised 400 branches so far, including 78 from March through December. Chase will open in Vermont and Maine for the first time, and the number of Chase branches in Massachusetts will go from 23 to as many as 32 this year.
Several will be what Chase dubs community centers: urban branches designed to be more like neighborhood gathering places. Chase opened its sixth such center in the Los Angeles area last week, and it plans to open one in Mattapan this summer.
These centers will offer skills training and space for entrepreneurs, alongside a staff “community manager” to engage nearby residents and small businesses. They represent one small part of JPMorgan Chase’s $30 billion commitment, announced last year amid the unrest that followed the murder of George Floyd, to advance racial equity and bring more opportunities to underserved communities.
It’s not as if Chase is immune to the trends facing the banking industry. In fact, Chase’s retail branch total fell last year, from 4,976 to 4,908, even as the company ramped up its entrance into new markets. Chase has retail branches in 38 states today — roughly the same number as Bank of America — but plans to be in 48 states by the end of September.
“We’re closing branches, too, but we’re also opening,” Dimon said. “Generally, we’re building the footprint, which I think is very important.”
Branches, he said, give banks an important physical presence in a market — a community hub of sorts, a source for philanthropy and small-business assistance. The role of the branch is shifting: People are coming in less frequently and are doing it for “advice-type visits,” Dimon said, as opposed to “transaction visits,” such as for deposits and withdrawals.
Dimon said he is more reluctant than many of his peers to close branches. He pointed out a brouhaha around a branch in a relatively remote part of Greenwich, Conn., that Chase had targeted for closure last year after it failed to meet the bank’s typical metrics for keeping a branch. It was still profitable, but apparently not profitable enough. Dimon received hundreds of notes from customers, pleading with him to save it. So he overrode the decision and kept the Banksville branch going.
“People inside the company got mad,” Dimon said. “I said, ‘I have a heart. I want you to learn to have a heart, too.’”
Dimon said he has long been bothered by the fact that there is not one true national bank, at least by his definition. The industry evolved in a hodgepodge way during the past four decades, after interstate banking rules loosened up. Big banks typically get bigger by acquiring smaller ones, bringing their customers and their business along with them. (Citigroup tried to buck the trend in Boston by opening standalone branches, but gave up in 2015 and left the market.)
In the face of a regulatory cap that makes additional bank acquisitions difficult, Chase has gone the “de novo” route instead, opening branches and recruiting customers one at a time.
It can be a slow, painstaking process. As of June 30, about 18 months after the first Greater Boston branch opened, Chase had $657 million in deposits in Massachusetts. That may sound like a lot. But it still represented less than half of 1 percent of the state’s market share — not enough to crack the state’s top 50. (For context, Chase was just ahead of the two-branch Winchester Co-operative Bank.) Most of Chase’s deposits in this state were tied to its Downtown Crossing branch.
Dimon said Chase’s progress in Boston has been “fabulous” so far. There was no question in his mind that Chase would come to Boston — and not just because he spent eight formative years here, including four at Tufts University and two at Harvard Business School.
Dimon was back in town to visit HBS, where a case study has already been written on his company’s racial equity initiative. He also met with some clients, and with some top managers here.
He’s clearly itching to see everyone again, after more than a year of remote work. He made headlines last week about how he wants JPMorgan personnel to spend at least half their time back in the office by mid-July. Apprenticeship has suffered while employees worked from home, he said, as has the “spontaneous combustion of ideas.”
Zoom sure is handy, as is mobile banking. But Dimon reckons that all the advances in technology can’t replace real, face-to-face contact. In fact, Dimon and his company are betting on it.