NEW YORK -- Though bank branches were supposed to vanish in the wake of ATMs, the Internet and telephone banking, U.S. branches actually grew 29 percent in the past decade to 87,209 at the end of 2002, according to the FDIC, which insures deposits.
According to a USA Today report, Bank of America, the nation's largest bank, will add 550 branches in the next three years, a 13 percent increase. Washington Mutual, the seventh-largest bank, said it will open 250 in 2003, increasing its network 17 percent.
'The branch is alive and well,' Hal Pote, an executive in charge of Chase regional banking told USA Today. 'If anything, the banking industry is very likely headed into a period of overbuilding.'
Chase is expanding its branch network and upgrading many of its 528 branches.
American consumers go to bank branches about three times a month, according to a November 2002 study by Synergistics Research. A core group -- about 30 percent -- said they visit their branches four or five times a month, according to an April Gallup Poll.
According to the USA Today report, the branch boom is being driven by several factors.
Branches are largely profitable. 'Banks realized that the seemingly boring old retail business is actually profitable, and it's not risky or volatile,' said Peter Carroll at financial services consultants Mercer Oliver Wyman. Setbacks in investment banking and commercial banking have contributed to retail banking's resurgence, he said.
Branches contribute to growth. 'We still get 98 percent of new customers through our branches,' said Liam McGee, president of Bank of America's consumer bank.
As banks peddle CDs, mortgages, mutual funds and annuities, branches also serve a key new role.
'Branches are more sales driven. They are more comfortable places, where customers research investments and do much more than just make a deposit,'said Mariner Kemper, vice chairman of UMB Bank, a 90-year-old bank based in Kansas City.
Branches are important outlets for small business. Small-business customers 'use a branch four to five times more often than consumers do,' Pote said. "They need a branch for cash deposits and payroll withdrawals."
