By Jeffrey P. Marsico, Executive Vice President of The Kafafian Group, Inc
This post originally appeared on Jeff for Banks
I had a very interesting conversation with a bank client today. He called me to discuss, among other things, his bank’s expansion strategy. During the discussion, I mentioned that I had recently driven by one of his branches and that it was the biggest in town. What he said about it inspired this post.
Being the biggest branch in town, in terms of square footage, is not something cheered among industry pundits these days. Indeed, if I were to summarize the sentiment, it would be that future branches would be much smaller, but with big a** signs. Those were another bank consultant’s words, not mine.
This CEO isn’t buying it. He said that since that branch underwent a $1.5 million renovation, its deposits grew by 40%. In prior years its deposit totals had remained in a relatively tight band. He opined that it is “amazing what visibility, access, and egress” does for a branch. He also said that his business owner customers demanded a nearby branch.
But he did not think the branch had to be in the same town as the business. The next town over would due.
Now that makes sense to me. If it costs, on average, $600,000 per year in operating expenses to run a standard branch, wouldn’t it make sense to build a large, marquis-type branch in every other town that cost $800,000 per year? By abandoning the every town strategy, you effectively save $400,000 per year. Continue reading ›