When Jamie Dimon was backstage at a conference and heard a competitor crowing about taking old JPMorgan branch leases and stealing the customers, he vowed it would never happen again.
That’s why the CEO of America’s largest bank at one point decided to personally rubber-stamp or veto every branch closure to ensure the institution didn’t lose more customers to rivals.
Speaking at AllianceBernstein’s Strategic Decisions conference this week, Dimon said Vernon Hill, who founded Commerce Bank in the 1970s, bragged at an earlier Bernstein conference about taking over the branch leases that JPMorgan had terminated.
“I was sitting here in the back listening to Vernon Hill and he was doing a slide presentation for all of you,” says Dimon, who has led JPMorgan since 2006. “He made fun of Chase. [Hill] said: ‘They closed this branch, I moved there. They closed that branch, I moved in immediately.
“As he walked down, I said, ‘Vernon, that will never happen again.'”
But the light-hearted exchange did lead to a change at America’s largest bank.
“I introduced a rule at the time that you couldn’t close a branch without my permission,” said Dimon – who was paid $36 million for his work in 2023.
“[Hill] accounted for 100% of the consumer activities [in those branches]. 100%. Even if there was a Chase branch just down the street [people said]: ‘Oh, they just go to the other branch.’ No they did not. They wanted that branch.”
Dimon, who recently shocked Wall Street by revealing he would be stepping down from the CEO role over the next five years, admitted that Commerce Bank “of course” did other things that ensured good service to keep former Chase customers from returning turn.
The Wall Street veteran did not provide the specific year in which the trade took place, but considering Dimon took the CEO seat in 2006 and Hill was ousted in 2007, the time frame is getting shorter.
Against the flow
In the US, banks are largely closing more locations than they are opening.
Research by S&P Global showed that a net of 1,409 bank branches would close in 2023. This was a slowdown in the pace of closures recorded in previous years: 1,854 in 2022 and a record-breaking 2,928 in 2021.
JPMorgan Chase, on the other hand, announced in February that it would make a billion-dollar investment in its branches, opening 500 branches and hiring an additional 3,700 employees by 2027.
Another 1,700 Chase branches will be renovated, with a focus on entering new markets in low-to-moderate income and rural communities.
Dimon pushed back on the theory that JPMorgan Chase is “doubling” the number of bank branches and said the company is also “consolidating some of them.” He admitted he was skeptical even about this.
“When I came to Bank One, they were consolidating – you know, ‘clicks not bricks,’” says Dimon – who was chairman and CEO of the institution from 2000 to 2004 when it merged with JPMorgan.
“They closed branches that were making $1 million a year in profit. They were said to have made $1 million in profit a year for the last 20 years – what on earth were they thinking?”
The Harvard alumni also had some advice about the future locations – perhaps a tip for his successor: “Be very analytical about what you close, why you close it, why you can keep it. I could give you some very specific examples of times when I’ve stopped closing a branch and they act like I’m interfering.” I’m not going to give you all those examples, I don’t want to tell my competition why.
“I also said: ‘If you close that branch, do you know who will open there? Wintrust.’ [Capital One]– like, tomorrow. [They’ll] take the lease and move in.”
In addition to ensuring consumers don’t switch lenders, JPMorgan is also answering some of the requests consumers have in the age of online banking.
Although the American Bankers Association found in 2023 that 71% of 2,211 adults surveyed prefer to bank via an app or computer, a significant portion wish their digital banks had more of a human element.
Nearly four in 10 consumers, according to user experience experts at UserTesting, wish their online bank had a human on hand to handle customer complaints.
Even though many consumers enjoy the convenience of online banking, some customers still prefer to speak to a teller.
In 2021, the FDIC reported that personal banking is becoming more common among “lower-income households, less educated households, older households, and households that did not live in a metropolitan area” – in line with the focus points outlined by Dimon’s team. .
This story originally appeared on Fortune.com
