Branch Banking

Just ten years ago hank branches seemed to be a dying breed, a casualty of banking industry consolidation and the hetiei that automated teller machines, online Hanging, and telephone ca(l cantets would reduce customers' reliance on their neighborhood branches. In Manhattan alone, the number of branches and hank oflices dropped from 607 lo ¿59 between June 1994 and June 2001. Yet now bankers say that the industry nverestimated ihe attraction of electronic banking and Hie profitability of retail banking. Many people want *sigh-touch" over "high-tcch,1 or at least the choice, and banks are responding by opening branches a" a breakneck clip. BanK of America, for inslancc. plans to open 550 branches over me next three years. Bank One Corp-, which lapped oFI £0 of its branches between 2000 and is expanding again, flanking analysis caution, however, Ihat the expansion of Ihe branch dislribulion channel, if not well thought out, could dilate banks' earnings. The hanks lhat will succeed, they say, are those thai are fully committed to Ihe retail strategy, such as Seattle-based Washington Mutual, and Cherry Hill, New Jersey's, Commerce Bancorp Inc. According lo Commerce's CEO, simply building a branch syslero is not enottgh. Banks need a proven, ■value-added" business model to entice customcrs and cross- and up-sell their ■ products.3*

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