Banks are the new corner stores 08 Aug 2005

52 comments Latest by Kara

It seems everywhere I look a vacant retail space is being snapped up by a bank. They’re opening branches everywhere. Sometimes there are branches of the same bank within just a few blocks in a residential area (we’re not talking downtown Chicago). It’s strange — banks are generally cutting tellers and emphasizing online interactions over human interactions, yet they seem to be growing their retail presence at an unprecedented rate. Something doesn’t feel right about this.

52 comments so far (Jump to latest)

Dan Boland 08 Aug 05

I’ve noticed that too, Jason. It’s as though the decision-makers at these banks have employed the Walgreens philosophy — flood the landscape with your brand at any cost and reap the benefits in due time.

DaleV 08 Aug 05

Banks are so 1987.

Jan 08 Aug 05

I’ve been noticing that they have been closing a few branches over here. (here being belgium). Kind of annoying when I want to get some cash, or load up my proton (electronic wallet).

Randy Peterman 08 Aug 05

I deal with a local (to Denver) bank. This of course sucks when I’m travelling, but the rest of the time it suits me just fine. Seeing as how I end up using my debit/ATM/Visa card most of the time anyway I would say I go to the actual bank building once every two months to deposit checks. Overkill is dangerous… I concur: something doesn’t feel right about this.

Benjy 08 Aug 05

I’ve been noticing this phenomenon for a couple years and I just don’t get it at all. I live in Lincoln Park, and I have at least 3 of each major bank chain within a 5-10 minute walk plus countless smaller chain and local banks—and it seems like every week there’s another one opening up in the neighborhood. But who uses all these locations? And what do the people working in them do all day? I rarely set foot in a bank branch… I’d doubt it’s even twice a year. And I’m sure a lot of other people use banks as frequently.

The problem has gotten so bad in some suburbs that they’ve instituted moratoriums on bank openings — not only do they reduce the vitality of the shopping districts because they don’t draw the foot traffic a store or restaurant would, but because they don’t sell anything the cities lose out on sales tax revenue, too.

ChitownE 08 Aug 05

I wonder if there is a direct correlation between decreasing mortgage rates and increasing number of bank branches. Whenever I go to my local Bank One, there always seems to be people talking to the bankers. What are they doing? My best guess is that the majority are securing mortages, since people are buying like mad right now.

ward andrews 08 Aug 05


sounds like another investment for the banks…real estate.

bill bulman 08 Aug 05

Working with several banks in my job, I know many are most definately trying to play the Walgreens game, over saturating the market and hoping to wait out and beat out the competition(or gobble them up).

They are also opening lots of branches in the anticipation that the banking industry may finally break into the real estate industry and be able to attack the currently entrenched real estate market. This is a current battle going on in the trenches between these two industries.

Ben Saunders 08 Aug 05

Odd. Here in the UK, most high street banks have long since been turned into trendy wine bars and bistros.

Speaking of odd, I had to teach a (very tech savvy) US friend how to send a text message on a mobile phone the other day. Is it true that ‘texting’ isn’t all that prevalent in the States? (I send hundreds a month).

Bill 08 Aug 05

Chicago has been a savings & loan battleground city of late due to it’s large latino population among other reasons. Washington Mutual, currently the nation’s largest savings & loan, centers it’s core strategy around brick and mortar stores. One of their slogans is “More Human Interest.”

In 2003 Washington Mutual started acting on a goal to open 70 retail stores in the Chicago metro area. What you’re seeing is other banks racing to build their own brick & mortar branches to compete (I worked for Washington Mutual for three years in the Consumer Retail Banking division).

Caleb 08 Aug 05

Either that or the human tellers that we are now so unfamiliar with have been replaced with robot tellers, programmed to serve you at a mediocre level — and, given the right command, take over the world.

It would be interesting to study the new locations of these banks in terms of strategic value.

kingbenny 08 Aug 05

@Ben: Although maybe not _as_ popular as texting in the UK, its fairly big here I thought… my friends and I send several hundred a month.

McKnight 08 Aug 05

The branches serve as security blanky billboards for the online services. I think many people are uncomfortable with the idea of banks that don’t have big safes full of money where they can go get it when the internet is broken. Having a local branch gives people the feeling that there is somewhere to go demand their money when their spyware programs are preventing them from lauching IE. I think they should move to locations that are just drive through ATMs with big signs.

chris sivori 08 Aug 05

IMO, texting is not big where most people drive more. If you’re driving you can’t send a text message. If you’re riding a subway you can. If you’re not travelling why not just use AIM?

As for the banks, I like it because whenever I get a check from a client I can run down to the bank near my house or near the post office, and they stay open pretty late. I don’t really know why they’re opening so many though unless there are plans for consolidation in the industry.

w 08 Aug 05

Here is an article from the New York Times on the subject: Bank Branches, Sprouting Like Weeds.

Choice quotes from the piece

“I don’t know exactly what all these banks do except for move depositors from one bank to another bank. And at some point, there’s only so many depositors.”

and

“It’s the lemming mentality again. Bankers are known for following each other over the cliff…. My prediction is that many of these offices that you’re seeing opened up now will be closed in a couple of years. Because there won’t be enough business to justify the expense of operating all these branches.”

I’ll note that the article is from Feb 2004. Nowadays, I still see plenty of new bank branches in NYC.

emm ess eff 08 Aug 05


Jason, it’s not your imagination:

“In the past two years, banks in the Chicago metro area alone added 488 branches — more new branches than any other area in the U.S.”

(From a February 2005 WSJ article run via http://www.post-gazette.com/pg/05055/462263.stm)

This issue has received quite a lot of press lately, with a number of reports focusing on the viral spread of branches and the redefinition of “banker’s hours.”

As for the real estate angle, consider this quote, as well:

“Landlords love banks, which are more likely to pay top dollar for space and are far less apt to go bust or move out than the latest sushi bar.”

COD 08 Aug 05

I think it’s probably connected to the banks moving into brokerage services, insurance, etc. Banks don’t make any money on deposit accounts - it’s all in the ancilliary services that still have a high “touch” value.

Banks 08 Aug 05

Money may not be all that ‘physical’, but we need to feel like it is.

I was in downtown highland park a few weeks ago and I counted SEVEN banks all within 2 blocks of eachother.

Darrel 08 Aug 05

Around here, a lot of ‘branches’ are actually mortgage offices and many of these are franchises.

8500 08 Aug 05

Along with the large number of new bank locations, I’ve noticed that the average age of the teller is going down too. Maybe I’m just getting old but I swear the tellers could be transplants from the fast food counter. Perhaps they are paying their store workers less so they can staff all of these new locations?

Dave Simon 08 Aug 05

I’ll go out of my way to go to the branch of my bank that I like most. The service is great, always greeted with a smile from a pretty young lady.

No, the pretty young lady isn’t the reason I go there, except for the fact she knows my name and treats me very well.

Coudal 08 Aug 05

Don’t overlook that fact that outdoor advertising in Chicago is limited and VERY expensive, a branch serves as a powerful advertisment for the brand and by choosing location carefully, bank marketers can target very specifc demos.

Scott 08 Aug 05

And wait until Commerce bank gets out there. They’re all about building tons of new locations (from scratch). Very customer oriented; they’re trying to do the “run a bank like a retail business” kind of thing.

Benjy 08 Aug 05

I was in downtown highland park a few weeks ago and I counted SEVEN banks all within 2 blocks of eachother.

My parents live in Highand Park and HP’s one of the ‘burbs with a moratorium on new banks because of their proliferation. without it, there’d be at least 3 or 4 more in those same two blocks.

nat 08 Aug 05

i think it is a zoning requirement in chicago that every block has to have its own starbucks and washington mutual bank. i have at least 3 of each within walking distance from my apartment.

Tracy 08 Aug 05

Chicago is also the headquarters of Bank One and a portion of Chase (They’re in the process of merging.) The new branches that those two banks are building (and re-modeling) are set up so that the tellers are at podium-like stations in the front, instead of being behind a huge counter. The new branches are also much smaller than the traditional bank branches.

Even with the push in online banking, there are still two generations of customers who shy away from it. They’re afraid of identity theft. There are still large groups of clients who have a hard time understanding why they can’t get a loan for their new tractor, based on a handshake like they used to, or have a hard time letting a female banker handle their investments (… at least in Texas.)

they’re trying to do the “run a bank like a retail business” kind of thing.

“Retail Banking” is the bank division for common individuals.

Right now, many banks prefer to hire bankers with a strong sales background. With interest rates so low and consumers less likely to stay with the same bank for their whole lives, the only way for them to make money is to run a bank like a business.

JF 08 Aug 05

Coudal, really interesting point re: using stores as billboards.

James 08 Aug 05

Same thing’s happening in New Zealand. Since 2002, the number of bank branches has been increasing again. Banks have been finding that although people are happy to move their routine transactions online, they value personal service/advice more. They’ve also been taking pains to open branches in expensive, high profile locations.

On the other hand, while branch numbers have been growing I believe they’re employing fewer staff per branch - thanks probably to the move online for the day-to-day stuff.

Paul 08 Aug 05

Actually the store as billboard idea is solid when combined with Ward’s comment way upstream about real estate being a solid investment. Advertise your brand while things are going well and, should the need arise, sell the store and make a tidy profit.

Ian 08 Aug 05

But are they actually purchasing the property or just renting? Cheap rent for a billboard or probably a good return for the investment.

Plus they can use the statistics for advertising their services to customers or potential investors.

pwb 08 Aug 05

No wonder ING Direct is so successful…four branches for all of USA.

AV 09 Aug 05

I’ve noticed the same thing here in the Burlington, Vermont area (pop ~150K). Most of the new (spare no expense) construction projects are new branches. But not for the big “brand name” banks, for for smaller credit unions.

Sam C 09 Aug 05

Don’t overlook that fact that outdoor advertising in Chicago is limited and VERY expensive

Yeah, but isn’t an entire storefront MORE expensive?

Bill Brown 09 Aug 05

I’m coming off 11 years working at Arizona’s largest credit union, which was about the size of a decent community bank. When I started out, everything was about service. Towards the end of my tenure (perhaps around 6 years), that definitely shifted. We started getting complaints that we were too bank-like and I think they were premature though well-founded. I was never anything but an observant peon.

In the first five years, we opened perhaps four branches total. In the five years after that, we opened 10. In the last year, we opened 10 more. They were talking about 20 openings next year. Most of them were within Wal-Mart Super Centers. (That always amazed me. There are two Wal-Mart Super Centers within five miles of me in north Phoenix and three more regular Wal-Marts within 10 miles.)

The reason we were always given for the rapid expansion was that in-store branches were considerably less expensive than standalone ones, that we wanted the visibility that being in a Wal-Mart could give us, and that we were following demographics. I think it was mostly the Wal-Mart visibility because the first and last reasons had existed since I started.

Locations have relatively little to do with getting deposits and everything to do with lending. My credit union had a voracious appetite for loans because we always had a huge pile of deposits just waiting to be used. So voracious, in fact, that the loans weren’t always so hot.

Warren 09 Aug 05

The little branches are there for one reason, Value Added Services.

A huge proportion of a banks revenues are now from insurance sales, and loan protection insurance.

Its pretty simple, that stuff wont sell well online and little ‘local’ brances will have tellers that will try to sell you products at every opportunity.

The old, get in there among them and sell sell sell. :)

blake fox 09 Aug 05

Here in Cincinnati banks are being bought by outside markets and attempting to entrench themselves into this market that is mainly held by a local Fifth Third Bank. I have also noticed that many banks here now have specialized mortgage offices that are separate from the bank branches.

Anonymous Coward 09 Aug 05

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electronic banker 09 Aug 05

Physical branches? I haven’t been into a bank in almost 8 years, I bank entirely online. I can toss checks in the mail to deposit them (easier than going to a branch) and tuck in ATM receipts to get refunded the $2 fee (cheaper for them than getting on a network). When I’ve needed service, I just call — I have yet to wait more than two minutes on hold.

I’m not going to mention my bank’s name because I don’t want to be an ad, but physical branches are just useless.

Dan Berkman 09 Aug 05

There is another force driving the branch construction and it starts with construction and ends in _oom. In New York City, where new construciton is becoming more common, building owners and developers look to banks to fill new retail space beacuse banks are good customers. They’re name brands and won’t take away from your new shiny building, they won’t go out of business and stop paying rent and they attract a lot of people to your building. I’ve seen vacant ground floor retail space stay vacant for months until a bank comes along. In New York City before long there won’t be anything besides 24 drugstores and banks. One place to get your money and another place to get rid of it.

Mike 09 Aug 05

I wonder if it has anything to do with banks used to be regional, now many are trying to go national, so they want a visible presence in a location they are expanding. For instance, 7-10 years ago I never saw a Bank of America, 5/3, National City or Citibank branch in Chicago. Now, they seem to be sprouting everywhere.

Wesley Walser 09 Aug 05

I like the question “what do they do in there all day”.

They aren’t helping people, and if they never help people they can’t be managing accounts of people who have come in at some point (atleast not all day long). They can’t be corperate, thats what main offices are for.

Guess we will find out soon enough.

Michael 09 Aug 05

I don’t understand the “they’re trying to run a bank like a business” statements. A bank is a business, and it has always been a business. And whoever said banks don’t make money on deposit accounts is smoking something. Granted, most banks do not charge you for keeping a checkings or savings account. However, banks only have to keep a fraction of the money you deposit. The rest they loan out or invest in order to make more money.

Tracy 09 Aug 05

Granted, most banks do not charge you for keeping a checkings or savings account. However, banks only have to keep a fraction of the money you deposit. The rest they loan out or invest in order to make more money.

There is money earned on money deposited in a checking or savings account. Some accounts return a portion to the customer (I average about 10 cents a month.) But it costs money to maintain an account… clearing checks, mailing statements, maintaining the online banking website, the customer service hotline, fraud investigation, as well as the branches and tellers. With interest rates as low as they were (they were raised to 3.5 percent today)… most checking and savings accounts lose money.

Michael 09 Aug 05

The average US Checking account costs around $100 for the bank to maintain. However, they only have to keep 11% of your funds on hand. So if you have an average balance of say $5000. The bank only has to find an investment that will return 2.2% a year to cover the costs of bank account. If you balance is higher or they find a better investment, they make money on your FREE checking account.

Christopher Fahey 09 Aug 05

The “stores as billboards” is it, IMHO. It’s like the Niketown stores and the Sprint stores - they’re showrooms and friendly faces, but ultimately they’re ads. Five new bank branches have opened in my neighborhood, and all of them have very showy lobbies that look like swanky airport cocktail bars. They are a stark contrast from the 1970s era banks which are all business, with dirty floors, low drop cielings, and paper everywhere, or from the grand earlier banks which felt more like great monuments or like halls of state.

Really Old Banks = Churches, Embassys
Old Banks = Check Cashing Joints
New Banks = Brand Experiences

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They have ruined my life; this Bank is full of CIRMINALS. Employees are looting, and those! BIG SHOTS are just watching and doing nothing.
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Thank You

Laila 12 Dec 05

URGENT URGENT URGENT!!!!!!!!!!!!!!!!!!!!!!!!

My heart goes to the people who have been ripped off by Bank Of America and their Employees

I can not explain in right words what Bank of America has done to me
They have ruined my life; this Bank is full of CIRMINALS. Employees are looting, and those! BIG SHOTS are just watching and doing nothing.
We the people who put our trust in them to protect our valuables.
?WHAT A SHAME? Please raise your voice and join me. I will be holding Press Conference within two weeks. Send me your Email for the date and time.

Please go to my website for details regarding Bank of America!!!!!!!!!

www.bankofamericaextortioninsidejob.com
lailasltn@yahoo.com

Thank You

Kara 09 Apr 06

With the proliferation of banks in Chicago, I was just wondering how you decide to do business with one over the other?

Kara 09 Apr 06

With the proliferation of banks in Chicago, I was just wondering how you decide to do business with one over the other?

Kara 09 Apr 06

With the proliferation of banks in Chicago, I was just wondering how you decide to do business with one over the other?

Kara 09 Apr 06

With the proliferation of banks in Chicago, I was just wondering how you decide to do business with one over the other?

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