JPMorgan Chase & Co. is starting to phase out an offering far more associated with old-fashioned bank branches than today’s smartphone apps: Safe deposit boxes.
The New York-based lender no longer allows customers to rent new boxes. If a Chase bank branch is shut, its safe deposit boxes will be closed as well, and their holders won’t be able to open a new box at another location.
“We made a business decision to stop offering new safe deposit boxes as of December 2021, but that doesn’t affect current customers who have boxes,” said JPMorgan spokesman Tom Kelly.
Banks have offered safe deposit boxes for decades as places for customers to store valuables and important documents. The future of the business is uncertain as U.S. lenders close branches at a record pace.
Even as financial firms also open new branches, they’re often smaller locations without room for the large vaults that house safe deposit boxes.
Historically, lenders have associated safe deposit boxes with losses, since they have to dedicate real estate and staff to running the business, according to the consultancy Safe Deposit Specialists. Still, the service caters to lenders’ longest-tenured and wealthiest account holders, with the average box holder making an income 14% higher than the national average, and most at least 50 years old.
“It’s the most expensive square footage you can put in a new branch,” David McGuinn, president of Safe Deposit Specialists, said in an interview. “If you calculate building a vault, putting a security system on it, there’s $10,000 worth of boxes, you have to train your people on it. It’s not a cheap service.”
The business traces its roots more than 150 years back, when Francis Jenks started a standalone safe deposit box business, McGuinn said. Jenks built a fire-proof building at the corner of Broadway and Liberty Street in New York’s financial district, outfitted with armed guards, according to an 1865 New York Times article.
It wasn’t until the 1930s that the U.S. Supreme Court passed a law allowing banks to offer the service, according to the Arkansas Law Review.
Since then, lenders have built millions of safe deposit boxes around the country. Prices vary by size, location and bank, with an average annual cost of $60 per box, researcher ValuePenguin has found.
“There’s not a whole lot of income in it,” McGuinn said. Still, lenders should realize “that the people who need these boxes are some of their biggest depositors.”