Has the bank branch reached the end of the road?
When I first went to work for Wells Fargo, one of the things that was hard to get used to was what they called their branches: “stores.” In hindsight, it made a lot of sense. Retail banks are called as such for a reason, after all. Most people think of branches as places to transact, but they’re very much retail environments, where brands are established (and refreshed), customers are profiled, and products are sold.
Around the turn of the millennium, the branch looked doom. Online banks with no physical locations were growing fast, and the traditional banks were building out their online capabilities.
Then traditional banks changed tack and doubled-down on meatspace. Major players built thousands of new branches to attract deposits, and some even radically redefined branches entirely. Umpqua’s wi-fi lounges (pictured above) and WaMu’s Occasio were particularly innovative. (Sadly, WaMu’s new Chase overlords are doing away with Occasio.) Commerce Bank grew super-fast with the simple innovation of extending their hours to times that were more convenient for working people.
But now Bank of America is retrenching, shuttering 10% of its branches. Does this mean the end of the store strategy?
Yes and no.
Yes: Retail (consumer and small business) customers are becoming ever more comfortable with online services. As they spend more time interacting with banks online, banks are finding more ways to market and sell through online channels.
No: America is over-retailed in general, and banks are no exception. BofA probably had too many branches to begin with. Other big banks that built out (or acquired) branch networks during the housing boom are probably now looking at their cost structure and finding many unprofitable locations. Shuttering may occur, but people will still want a physical location to transact checks, cash, and the other tangible forms of money that still power our everyday economy.
We can only hope that more of these banks will follow the Umpqua and Commerce models and create a branch experience that its customers don’t hate. Whoever does that will win deposits, and today, that matters more than anything.
August 1st, 2009 at 6:25 pm
There are still huge sections of gentrifying Brooklyn where neighborhood stores are shutting down and beting replaced by bank branches for no reason anyone can fathom. Bank branches and CVSes.
August 4th, 2009 at 4:00 am
Then there’s Citibank’s presence at 7-11s. Citibank likes to portray itself as the bank for urbane, upper middle class or rich folks who have money and need a full service financial service company to take care of every need. Now they’ve got ATMs at 7-11s, which is a place for cabbies, policemen, students, and other folks looking for a quick Big Gulp, a pack of cigarette, and a lottery ticket. It’s a weird mix. The Citibank/7-11 thing hasn’t really melded. The ATM is cheap, so it doesn’t feel like a Citibank. However, this partnership is a cheap way to provide access to existing customers and to expose the bank to millions of potential new depositers.
August 4th, 2009 at 8:15 am
Citi is a whole different ball of wax. They’ve also made major investments in the check-cashing and payday loan business, plus financing for mergers and oil platforms in Nigeria and dams in China and toxic mortgage CDOs. Their rapid devolution into a plain vanilla regional bank will be good for everyone.
That said, most major banks have expanded into all markets, with both high-end financial advice and low-end services for the unbanked. Either market can be highly profitable.