The Real Deal New York

Why big banks are pulling back from lower-income areas

JPMorgan Chase is leading the trend
March 10, 2019 09:30AM

People stand inside the offices of JPMorgan Chase on March 17, 2008 in New York City (Credit: Getty)

JPMorgan Chase is increasingly shrinking its presence in low-income areas.

Even as JPMorgan plans to open 70 new locations around the largely wealthy Washington, D.C. area, the bank is pulling back in less affluent neighborhoods, Crain’s reported. A year ago, the bank said it plans to spend billions to open 400 branches and boost lending in a national expansion. So far, JPMorgan has applied to open 185 new branches, with 71 percent of them in more affluent areas. Of the 187 branches its closing, about half are in areas where the median income is lower than the national level of about $60,300.

It’s reportedly part of a broader shift as the country’s largest banks cut back faster in relatively poor areas. Across the country, nearly 2,000 branches have been shuttered over the past four years in lower-income neighborhoods than were opened, according to data from S&P Global. JPMorgan, Wells Fargo and Bank of America were the banks at the forefront of the change.

Consumer advocates warn that the trend may exacerbate the wealth gap and leave many low-income areas with less competition for personal checking and small-business lending.

“Bank branches are a crucial part of financial access,” said Scott Astrada, a policy advocate at the Center for Responsible Lending. “The argument that we all live in this digital society so we don’t need bank branches is completely false.” [Crain’s] — Meenal Vamburkar