Bank of New York Co. has embarked on a supermarket branching strategy.
Since April, the $61 billion-asset New York banking company has opened eight full-service branches in suburban supermarkets. More in-store branches are to be opened early next year.
Bank of New York operates 375 traditional branches throughout the metropolitan region, mostly in suburban New Jersey, New York, and Connecticut.
But analysts said the bank has long been best-known for its specialties in private banking, asset management, and retail services for high-income people.
Bank of New York has been trying to break out of that mold this year, venturing into grocery stores with full-service branches and launching a PC banking product. Both initiatives are designed to appeal to a younger, more technologically literate customer segment.
The bank is also trying to extend its reach. "This is a real opportunity to expand into markets where we want to be but aren't right now," said Richard Crowley, senior vice president in charge of the project.
In-store branching has been a concept more familiar at huge California banks that direct their retail efforts at the middle market. Wells Fargo & Co. in San Francisco has the biggest supermarket program, with 700 in-store sites across its multistate branch network.
Consultants said in-store branches have become popular as banks try to find lower-cost ways to reach customers. The number of new in-store branches has been growing at a 30% annual clip since 1993, according to data tracked by Speer & Associates in Atlanta. By the end of 1996, there were 4,800 in-store branches.
Most of those outlets are in the West. To date, 17% of the nation's 29,900 supermarkets have bank branches in them; two-thirds of these are in the West.
Because space is at a premium and rents are higher, the phenomenon has been slow to arrive in the Northeast. Only 9% of supermarket branches are in this region.
In-store branches are attractive because their start-up costs are substantially less than those for traditional branches, said Gerard Hergenroeder, a senior consultant at Speer & Associates and a former banker.
Traditional branches can cost $1 million to open, compared with $200,000 to $400,000 for an in-store branch, he said.
In-store branches also offer access to a potentially more profitable customer than traditional branches. "Average balances at these in-store branches are higher; transaction volume is higher; and customers are more electronically oriented," Mr. Hergenroeder said.
More flexible hours also appeal to consumers. Bank of New York's in- store offices are open 10 a.m. to 7 p.m. weekdays and 10 a.m. to 5 p.m. weekends.
