Big banks have been on a branch building binge in the last few years, trying to grab and hold onto customers. But this recent push may be nearing its final frontier.
Banks view their branches as gold mines, not costs. Their checking accounts can generate a steady stream of fee income. Their tellers can sign customers up for new products, spurring overall sales. All the while, branches can collect millions in cheap deposits that can be lent out at higher rates. Even as they offer options like online banking and kiosks in convenience stores, banks still hope to lure customers inside a physical branch.
The upshot is that big banks are treating their branches more like traditional retail outlets than ever before.
“I just think the building frenzy in branch banking is probably nearing its peak,” said Vernon W. Hill, Commerce Bank’s chairman and chief executive, who is credited with igniting the branch building boom in Manhattan, starting in 2001. “Maybe I am dreaming, but I think we are going to look back at this period and say this is the top.”
Kevin P. Fitzsimmons, a banking analyst with Sandler O’Neill, thinks the retail banking revival may soon end.
“The boom in branch banking is over,” he said.
“You will probably see a radical scaling back of new branch plans for most banks. We are already starting to see that already.”
thro' NY Times