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The branch banking phenomenon

The branch banking phenomenon

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An examination of recent changes to US bank branch networks and the approaches to branching adopted by large banking organisations, by Beverly Hirtle and Christopher Metli.

A look at branching trends between 2001 and 2003 reveals that banks with large networks grew slowly and strategically during this period as they adjusted their branch holdings within existing markets, while institutions with midsized branch networks expanded more aggressively.
The renewed interest in traditional branch banking stands in marked contrast to the trends of the late 1990s, when technological innovations such as online banking and call centres seemed to challenge the bricks-and-mortar method of delivering banking services.
The authors conclude that consolidation of branches into large and midsized networks means that more customers will be receiving financial services from large banking organisations. In addition, the expansion of the midsized branch networks and the overall trend toward consolidation provide strong evidence that banking organisations continue to view retail banking and deposit taking as profitable activities.
Beverly Hirtle is a vice president in the Research and Market Analysis Group's Banking Studies Function at the Federal Reserve Bank of New York; Christopher Metli was an assistant economist in the same function at the time the article was written.

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