Is the branch part of the future of American banking? Or are we likely to see central offices connected by ATMs, home banking terminals, and POS devices of high sophistication making the bank branch unnecessary?

Gather two bankers to discuss the topic, and you are likely to get three opinions.

For to some, the branch is still the wave of the future. It is the means of providing a customer service facility where people can come face to face with the financial professional - thereby giving the bank with a branch network a decided selling advantage.

To others, however, the branch is an anachronism - a relic of the days before electronic technology eliminated the factor of distance.

Community Character

Naturally with such disparity of opinion there is no black or white answer. Rather the role of the branch depends in great extent on the individual community and the demography of its environs.

All admit that where the branch is located plays a big role in determining whether it can remain viable or not. And by this is meant not just the community it is in, but also whether it is properly located in the community.

As example, consultant Carl S. Meyer of Manhasset, N.Y., president of Meyer & Associates, explains that if a branch is located where you have to cross against traffic to reach it on your way home from work, forget it.

Nobody will cross against traffic to get to a bank or gas station, and nobody goes to a bank on his or her way to work - they don't have time. So, for a bank branch to succeed, it has to be on the side you pass on your way home.

Similarly Meyer looks at the age of the bank's customers. Older people want a "touchy-feely" human at a branch. Middle-aged people accept an ATM but not much more, as they want a paper trail and find computer banking intimidating. Only the younger people are willing to see the branch go the way of the passenger pigeon.

How many bankers look at the ages of their customers and make their plans with this in mind?

What happens is that too many banks have forgotten the marketing rule of giving the customer what he wants, not what the bank wants to provide.

But age is not the only demographic factor that should be examined in determining a bank's branch policy.

Again Carl Meyer likes to assert that branch viability involves turning dross into gold by analysis of what the customers want and then providing it.

Take hours of operation. Have they changed with the customer base? If a town becomes blue collar and both parents must work to support the kids, can a policy of 9 to 3 be justified for platform officer access?

What about a declining area? As the banks leave the region, the check-cashing services come in, and obviously they do quite well judging by their proliferation.

Is it possible that a full-service branch can be modified to provide this type of service on a profitable basis also in.stead of just pulling up stakes as the community changes?

As America shifts from a nation of factory workers to a service nation, in many towns, the local hospital or college has become the major employer. Isn't this an important trend to factor into branch locations, closings, and openings?

As the merger and acquisition movement speeds up, one scenario we have seen repeated over and over is that the bank that acquired another and moves the staff people around often loses customers by the hundreds to the bank across the street that keeps the same familiar faces behind the teller windows and on the platform.

Personal Service

Doesn't this tell us something about the value of person-to-person contact?

To some top bankers this reliance on branches as the only way to grow explains the acquisition trend, because saturation of branches makes start-up expansion financially impossible.

But banks thrive on earnings, not size. So the real test of a branch is whether it brings in enough low cost money to justify its existence. For if the cost of the branch, coupled with the cost of the interest on the deposits it generates, is more than the cost of buying impersonal CD funds, then why bother to have the branch?

If we want a posture of impersonal strength and competitive yields but little else, then a policy of full-page ads, heavy airwave penetration, and 24-hour "800" numbers can fill the bill.

But most banks instead prefer to stress their roles as friendly, helpful organizations staffed with professionals - people who make the difference in an industry in which everyone's basic product, money, looks the same.

Mr. Nadler is a contributing editor of the American Banker and professor of finance at the Rutgers University Graduate School of Management.

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