NEW YORK-Most large banks are competing to build bigger and better branches, but HSBC is betting that smaller is smarter.
The British bank spent the past two years shedding real estate in the wealthy New York region, selling off its branches in the suburbs and farther upstate. In the city, big competitors are unveiling shiny glass boxes on high-traffic corners, but HSBC is sticking with its staid, conservative storefronts. It is building branches in other markets, particularly on the West Coast, but they will be much smaller - 2,500 to 3,500 square feet, compared to its 8,000 to 15,000 square-foot floor plans of yore.
"Customers don't need (big branches). They're expensive. Footprint just costs money and at the end of the day, either the shareholder gets less return or the customers pay more. Someone has to pay for all this space you're not using," Kevin Martin, the head of HSBC's North American retail banking and wealth management operations, told American Banker, an affiliate of Credit Union Journal.
Some of HSBC's recent branch pullback was born of necessity, as the struggling and scandal-buffeted parent company dumped unwanted U.S. assets. Some of it is a deliberate effort to focus more on wealthy and international customers, who expect their bankers to come to them. Martin said that HSBC Premier customers, who deposit and invest at least $100,000 with the bank, get "personalized relationship managers" who pick up the phone at all hours, stop by their customers' homes or offices, and help coordinate any sort of specialized banking services customers may need. And when your bankers specialize in making house calls, you don't spend money building mass-market clinics.
Customers Not Complaining
Some of HSBC's branch strategy is also a response to the growing reality of online and mobile banking technology, which has consumers of most income levels relying less on their local tellers. "I think that branches are really critical, I really do. I'm just not sure that they need to be as big and as retail, as transactional, as they used to be," Martin said in an interview last month.
He acknowledged that HSBC's 100 or so remaining New York branches aren't "as big and as flashy" as some competitors' newest locations, but "I just don't think they need to be," he says. "I never get complaints from customers saying, 'If only you had another branch, I'd open my account with you.' It's just not what they say anymore."
