What's Behind the Bank Branch Building Boom?

"Today, there has been a serious change of mind. Banks view their branches as gold mines, not costs."

— New York Times (8/9/06)

Ten years ago I ghost wrote an article for A.T. Kearney about how the Internet was going to take over banking. It was inevitable -- given the web's huge convenience and cost advantages. Why would anyone stand in line at a teller window when most of the time they can go right up to an ATM or, even better, just go online? For years I've been waiting for the lines at my corner Bank of America branch to disappear. Frankly, I had expected the branch itself to disappear when Bank of America bought Fleet.

Neither happened. And in fact the branch has recently been expanded -- with the addition of a cozy living room area with couches and coffee table and coffee. As for the lines -- they are longer than ever. (I think swapping out a Stop & Shop next door for a Whole Foods Market also helped build foot traffic.)

As The New York Times recently reported, we are in a nationwide bank branch building boom -- with retail deposits up 4.8% per year from 2001 to 2005. There are now more branch banks in Manhattan, according to the Today Show, than Starbucks.

This trend says a lot about the relationship between marketing and technology. Money, from a strictly technical point of view, is the purest form of commodity and logically should lend itself better to electronic commerce than anything else, even books. You don't have to see or touch money, or read a sample chapter, to know exactly what you are getting. It's something that everyone understands completely.

The contradiction is of course interesting, but what is even more interesting is that it flies in the face of what had been the conventional wisdom. Once again, we find we act differently than we think we will. Many people obviously get value out of standing in line and interrupting their day -- at least where money is concerned. Maybe the world only looks flat.