RFQ: Why Do Banks Still Have Branches?
Other than the time the house painter asked me to pay him in a giant load of cash that he could dispense to his workers, I don't think I've used the services of a bank teller in at least 14 years. So when the local listserv filled with angry and exasperated comments about the news that the site of a demolished movie theater would soon be home to yet another bank branch, I joined my neighbors in puzzlement.
Today's Random Friday Question: In this era of online bill payment, direct deposit of paychecks and ATMs at every turn, what is the lingering function or attraction of a physical bank branch?
Throughout the nation, residents, community planners and retailers are wondering why there seems to be no limit to the desire and ability of banks to snap up retail spaces that used to house all manner of shops.
An American Bankers Association survey this summer found that only 36 percent of U.S. consumers use branches as their primary banking method--but that's still the largest group clustered around one method. Online banking came in second at 23 percent, followed by ATMs at 21 percent, mail at eight percent and telephone banking at five percent.
The survey found that those who cling to the notion of going to a bank office are generally older folks; this is one of those generational splits that you see a lot in studies of how we live these days. But still, a substantial 25 percent of those under the age of 34 side with the older crowd and prefer to do their banking in person.
Why? Money's a funny thing, and apparently there are still lots of folks who just don't trust the machines and the Interweb when it comes to their hard-earned dollars. A majority of Americans are just fine with viewing statements and paying bills online, but when it comes to depositing checks--well, for that, we seem to put more trust in the old idea of handing the paper over to another human being.
For me, the opposite holds true--I far prefer the mechanical incorruptibility of the machine to the fallibility of my fellow man. Plus, I don't understand the attraction of waiting in line for the chance to attempt communication through a thick plate of bulletproof glass. If I crave that experience, I'll go get some lousy fried food at a bad carryout.
A huge majority of Americans still visit a bank branch at least once a month. What do they do there? Loans, ok--but that's not an every-week activity. For the normal exchanges of paychecks and bill payments, what allure is there to visiting the teller?
I think security and comfort play a large role here--the same holds true for the continued widespread use of paper checks when electronic bill payments make vastly more sense. Somehow, many, if not most, of us believe there's something unreliable or fishy about taking care of our personal finances here on the typing machine.
Still, this is one weird phenomenon: According to several reports, the enormous expansion of banks into every retail nook and cranny isn't even profitable for the banks, which are stretched thin. Retailers in other businesses tend to resent the banks' expansion into ever more branches because banks pay high rents and drive up rental rates for everyone else.
I'd love to hear your theories on why we cling to bank branches, and your thoughts on whether this will continue as generations more comfortable with online life assert themselves.
(P.S.: A decade ago, there were seven movie theaters within a few blocks of my house; today, there are but two. During those same years, the number of bank branches in the same area has nearly doubled, to about a dozen. That probably tells us more about the consolidation and decline of the movie theater business than it does about anything else, but the fact that cinemas die while banks proliferate has to mean something. What?)
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