Academic journal article ABA Banking Journal

The Branch Boom in Miniature

Academic journal article ABA Banking Journal

The Branch Boom in Miniature

Article excerpt

FOUR NEW BANK BRANCHES along a half-mile stretch of road in less than a year gets people's attention--especially when the last new branch to open there was at least ten years earlier.

As mentioned in the cover story, yours truly has been asked by friends and neighbors, "What's up with all these banks?" Mamaroneck, N.Y., a leafy suburb of New York City, is not exactly a high-growth area. It is an established community of middle class-and-up demographics. There is a fair amount of Wall Street money in the area, which, no doubt, explains part of the attraction to branch there, even though no fewer than seven banks were already in the market.

Surprisingly, nonbank investment brokerages have little physical presence in the area, although the brokerages of Citigroup, JPMorgan Chase, Bank of New York, and Wachovia are quite active. A hot mortgage, refi, and home equity market is a big draw, of course, as it is elsewhere, but deposits generally are the main driver of branch expansion.

All in all, given the maturity of the market, people are scratching their heads over the influx of shiny new branches lined up along U.S. Route 1--all from banks new to the area. (See photos on p. 38.) The newcomers have attracted attention just by their presence. Have they shaken up the "old guard"?

Definitely.

One bit of evidence was the comment from a woman who said that for the first time, an employee at one of the established branches where she does business was positively chatty. "They actually talked to me as if I were a person."

That comment encapsulates one of the best effects from the now highly competitive retail banking marketplace. …

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