Data-Led Growth in Branch Banking with Adrenaline’s Head of Analytics

Analytics for Network Planning at a Glance:

• Institutions typically see outsized deposit returns once they reach roughly 6-8% branch share in a market
• The network effect is still an undeniable predictor of success with critical mass unlocking benefits of the branch presence in the market
• Branch-based account openings retain 73% of new checking accounts a year into that relationship

In an industry where capital is limited and growth expectations are always rising, banks and credit unions are under increasing pressure to be even more precise about where and how they invest. In this conversation on the Believe in Banking podcast, Adrenaline’s Nick Mentel, Managing Director of Insights & Analytics, explains how data-led branch network strategy has become one of the most reliable growth drivers for financial institutions. From unlocking the network effect to improving the performance of branch formats, Nick shares how smart analytics and disciplined strategy help institutions leverage market opportunity, brand presence, and institutional investment for success.

What matters most when banks and credit unions think about growth today?

For all the hand-wringing over a drastically evolving business model, the network effect is still an undeniable predictor of market level success. And let’s really explain the network effect. It’s perceived convenience as an institution, perceived brand and branch ubiquity. When a customer, member, or a prospective customer is considering their options, they will lean into convenience where there is an institution that has convenience and access in terms of physical outlets. That will psychologically play an important role in that decision-making process. This research has not wavered much in decades. We tend to see outsized marginal returns from a deposit share perspective when that institution achieves typically 6-8% branch share.

How should institutions think differently about expansion?

Critical mass is really the output of unlocking the benefits of the network effect is that overarching goal to maximize the chance success. The fundamentals of a market need to make sense for investment. From a demographic perspective, we need to see ideally a younger segment in alignment in a market with the financial institution’s goals – demonstrated deposit growth in concert with household growth, healthy macroeconomic indicators, employment rates, and a lack of competitive oversaturation. It’s tough to grow where there are established players and minimal household growth. From a quantitative perspective, that allows us to model for future demand, not looking at just where deposit and loan opportunity exists today, but where it will in five years and not just at a high level, but within individual product lines by income bands, so we can really get hyper-specific in terms of that opportunity.

Nearly half of de novos fail to reach profitability. How do analytics improve the odds?

We work big to small, so we’ll ask several questions. What are the MSAs with opportunity? What submarkets within those metropolitan areas demonstrate opportunity indicators and what sites within those submarkets hold the highest potential? So we get fairly granular from a real estate perspective. We’ll look at population migration trends, commute patterns, mobility data, etc. And then at a micro level, a thorough understanding of real estate nuances, design implications, both from a zoning and other construction perspective, but also from a peacocking perspective, a brand expression perspective. Ultimately with the goal of bringing this roadmap to life with appropriate hiring, marketing, design, and all of the other elements that are admittedly just as important as picking the right market to grow.

How are institutions balancing efficiency with growth?

Regardless of institution size, many of the same concerns pop up. One is unnecessary physical space due to evolving needs, a line of business focus, fewer in branch teller transactions, etc. And our primary approach is around very selective consolidation. We’re cognizant not to abandon a community in any way or abandon that perceived convenience, but through something like selective two-for-ones. It’s all about maximizing growth potential. 

Sometimes this simply comes down to an analysis to identify what the higher upside is, so maximizing that growth potential while ensuring that alignment and keeping an eye toward perceived ubiquity, which more and more comes in the form of varied formats. We certainly are seeing smaller square footage, more micro branches, points of convenience, points of presence in a market, but less capital investment per site.

And another one is remote assets. That can certainly be a polarizing topic, but remote assets, remote ATMs or ITMs can be highly branded assets to compliment the traditional branch presence. Ensuring alignment with our clients about the strategic goal of offsite ATMs and ITMs really how they should be used from a marketing perspective versus an operational one. And then assessing placement options to maximize visibility. Highly trafficked corridors, again, highly branded work that Adrenaline has done in spades. A remote asset is really a complimentary feature and should not stand on its own in a market.

What does the data tell us about fintech growth versus traditional institutions?

Our partner Curinos published a research study indicating the dramatic growth of fintech players in terms of checking account openings. These aren’t just deposits, but core deposits. In 2024, fintechs accounted for 47% of new account openings. Chime, PayPal Cash App, the names you’d expect have driven a lot of that increase. And this is the good news: the quality of those relationships isn’t there, even if the quantity is. This same study demonstrated that a year into a relationship, a branch-based account checking account has retained about 73% of new checking accounts a year into that relationship. Whereas the digital account openings are just 38% a year later. So nearly a 2:1 ratio in terms of retention, leading us to believe that those branch account openings are just stronger, stickier relationships.

From digging deep into the data to defining the footprint strategy, Adrenaline’s retail strategy and market analytics services help banks and credit unions make better network decisions that drive growth through the branch channel.

Adrenaline is an end-to-end brand experience company serving the financial industry. We move brands and businesses ahead by delivering on every aspect of their experience across digital and physical channels, from strategy through implementation. Our multi-disciplinary team works with leadership to advise on purpose, position, culture, and retail growth strategies. We create brands people love and engage audiences from employees to customers with story-led design and insights-driven marketing; and we design and build transformative brand experiences across branch networks, leading the construction and implementation of physical spaces that drive business advantage and make the brand experience real.