Why are there so many bank branches?
I was walking through the city where I work and in the span of 3 blocks, I passed no less than six different bank branches and one credit union.
I was, frankly, speechless. Who goes to a physical bank any more? I would think that what with the Interwebs and all, the number of bank branches would have actually decreased or, at very worst, stayed stable. But no. I still see banks being built. In one bizarre case, I saw a bank razed…and another bank put up on the exact same plot of land!
Let’s see. Internet banking is
- Faster
- Easier
- Other-people-free
Yeah, I guess I can see why there would be more people banking in person. Ugh.
There’s just no excuse if you’re not using direct deposit at the very least. I remember being a kid and going with Mom to the drive in bank teller every Friday to get cash for the weekend and those boss Dum-Dums. Sometimes I marvel that anything got done when I was a kid. You had to actually plan stuff. You had to know how much cash you needed for the weekend.
There’s just no reason for that in this day and age. But maybe I’m wrong. Maybe something really great is going on in bank branches that I’m not aware of. Maybe they have monkeys riding unicycles for your entertainment while you wait or something. Or maybe the customer service is just that awesome. Uh, maybe not.
(And yes, before anyone points it out, I’m aware there are certain things you need to actually go to a bank branch for. They just don’t happen with the frequency that you’d need hundreds more bank branches.)
November 9th, 2007 at 10:31 am
That’s suprising indeed. I think there’s some of that near my place as well. But my money’s currently in a bank over 2 hours away and I manage it all online.
November 9th, 2007 at 11:28 am
I don’t understand it either, and what I also don’t understand is how busy bank branches are. The few times I do go into a branch, it is almost packed with people.
Clearly there are still some employers, especially smaller ones who don’t pay employees with direct deposit, so workers have to cash checks. You also have a large number of elderly people who probably don’t do any electronic banking (or trust it). And then you have a lot of retail businesses that need to make cash deposits, get change orders, etc.
Of course, for the average person who does have internet access, there are very few instances that require going into a branch. Unless it is a customer service issue, or the need to physically deal with another person, almost anything can be done online.
November 10th, 2007 at 6:28 am
Let me see, there are lots of reasons for needing bank branches. Small businesses for one for deposits. People who don’t have internet access. People whose companies do not offer direct deposit. People who earn cash or a check and need to cash the check or deposit/transfer cash. There are also, as you’ve stated, very specific reasons to go to a bank branch, too. Online banking isn’t necessary faster. If I want to get a cashier check or money order or have something deposited right now, going to a bank branch is far quicker and easier. If I want to withdraw money higher than limits allowed by ATM or via online banking, then going to a bank branch is easier and quicker. I could list a bunch of other reasons why people use bank branches and why bank branches are necessary, but you get the drift.
Last thing, whenever I go to a bank branch, they are always hugely busy, which indicates there are lots of reasons for needing a bank branch.
November 11th, 2007 at 6:51 am
Tim makes good points. I find it crazy here in NYC as well the number of bank branches I see, from my office I can walk to probably 5 different Citibanks within 5 minutes. Same with BofA, Chase, etc. But there are a lot of reasons to do this. One major thing they want to do is market the bank as being easily accessable. When I moved here to NYC for instance I chose to bank with Citibank right away because I saw them all over the place and it was good to know that I have easy access to the physical branches whenever, wherever I need. Even though I do most of my banking online. But my banking needs are simple. You can’t do a lot of things online, you can transfer money, check balances, pay bills. But you can’t withdraw cash of course, and if you need more than $500 most ATMs won’t provide that. You can’t get traveler checks, cashier checks, or money orders as Tim says. But in the end I’m not sure how profitable each branch is. It may be that if Citibank decides it doesn’t need so many branches in NYC and closes a bunch of them they will lose a lot more customers just due to the lower profile they will seem to have. I suspect a lot of the reason is just for marketing.
November 11th, 2007 at 7:48 am
I do most of my banking online and still I have need to go into a branch almost weekly. I don’t trust any automated deposit solution (BofA’s new check scanning included) ever since I was in college and an ATM lost my $500 check deposit. Never again. Anytime I get cash or check for deposit, I go into a branch. I do consulting on regular basis, which means that I’m stopping in at a branch immediately after the customer cuts the check. I’ve got one in my wallet right now for deposit, and another coming through the mail on Thursday.
NOTE: It has been about 12 years since that check was lost. I work in the technology industry and have for 14 years approximately. I trust very little technology with actually handling my money.
All the other reasons listed by Tim are also completely valid, and I have done some of those in the last 2 years too. Especially cashier’s check for funding other investment accounts; I’ve had to transfer funds to setup managed futures accounts or get cashier’s checks to send to the trustee.
Most of my banking is done online, but I will always deal with a bank that offers the option of physically throttling someone if they screw up my money.
November 12th, 2007 at 12:15 am
I need a branch to deposit my survey checks. lol
November 12th, 2007 at 8:56 am
@ Jeremy & Tim - you make excellent points about small business owners and people without direct deposit. As I said, I do know some things must be done at a branch.
@ James - I think you nailed it! Now that I think about it more, I’m sure many people do as you did when you took survey of the most common bank and/or ATM in your neighborhood and chose a bank accordingly. I think you’re also right about marketing - just having the brand out there is worth something, I suppose. And as you point out, I’d bet many of the branches lose money.
@ Khyron - I can’t argue with your behavior after your experience.
November 13th, 2007 at 5:12 am
I too do most of my banking, and especially bill paying on-line… it’s far faster and easier! Likewise, most everything I receive is direct deposit into my account as well. I’ve been operating this way for quite a few years now, but I have always made it a point to go into the local branch office on a somewhat regular basis with the sole purpose of building a personal working relationship with key people in the bank… usually the folks that sit behind the desks.
Most of those times I went to the branch, I could have accomplished what I needed another way, but the face to face relationship is, to me, invaluable. There have been times when I’ve needed something done where I was unable to get in to a branch office (travelling on business for example). In these cases, I was able to leverage those working relationships and accoplish what I needed with a phone call and a promise to come in and tie up loose ends (sign papers or something) when I got back.
Last year I took a position overseas for a few years, my bank is still there, and I have an arrangement with the bank, and specifically those same people in the branch office that “know me” to take care of my banking needs remotely. I’ve got a person I can call.. one single person who is familiar with me, my banking habits and needs, etc.. and not a mass call center with a set of strict one-size fits all things they can do.
November 13th, 2007 at 8:28 am
@ EJD - You’ve really thought this through. I’m a bit surprised, though, that there isn’t higher turnover of the employees in the branch. I’d think they’d move around too much to make this worthwhile, but your experience proves me wrong.
November 21st, 2007 at 2:19 am
@ KMC - Your mileage may vary…. in my experience though, the tellers usually rotate through relatively quickly, but the branch officers and them folks that sit behind the desks tend to have more longevity…. in this particular instance I’ve dealt with the same person for over 10 years now and through 6 major mergers…. also having done long stretches of extensive travel, I’ve learned a few lessons about getting some things done the very hard way.
September 30th, 2008 at 6:19 pm
Yes, all of the points sited are valid reasons for having access to local branches. HOWEVER, I still think that the question of “WHY SO MANY” needs to be addressed. In the last few years, in particular, braches are opening up left and right. I live in a community with 18,000 people, but there are at least 30 bank branches in this town, and more than half of them are new branches opening in the last 18 months. I would suggest that much of this is due to the mortgage crisis (giving mortgages to people who can’t afford them) has contributed to the proliferation of bank branches.