Airport bank branches can be expensive to run and typically do not generate much new business, yet SunTrust and a handful of other banks believe that they still have a role to play in their retail strategies.
Last week, SunTrust Banks announced that it is opening a branch at Hartsfield-Jackson Atlanta International Airport in the very spot that rival Wells Fargo vacated.
It’s all part of the Atlanta bank’s effort to raise its profile both in its hometown, where it already owns the naming rights to the Atlanta Braves’ new baseball stadium, and nationally. Hartsfield-Jackson is the world’s busiest airport, and the city itself is a major hub for national and international events, including next year’s Super Bowl.
The move is not without risks. Rents at airports are often steep, deposit volumes are low, and the revenues aren’t much to write home about. Indeed, Wells Fargo closed its branch in the airport last year — though not before negotiating a rent reduction — because ATM revenues had been declining steadily. Given these challenges, it is not surprising that there are only about 15 publicly accessible bank branches operating in U.S. airports.
Yet even if the airport branches aren’t pulling in much revenue, bankers and other industry experts believe that they can serve banks well as advice centers. After all, it is not uncommon for passengers to have an hour or more to kill before boarding their flights.
Airport branches can also serve as effective — though expensive — billboards, said Dave Martin, a retail banking consultant and founder of bankmechanics.
“Atlanta is the busiest airport in the world and SunTrust is based in Atlanta, so they’ve got a massive customer base there. If there’s any bank that has any more reason to have a beachhead there, it’s SunTrust,” Martin said of SunTrust’s move. “It’s a great branding tool if it’s run right.”
Jon Voorhees, a consultant with Peak Performance Consulting Group, agreed that the value of an airport branch is primarily its visibility. Passenger traffic at the world’s 20 busiest airports rose 5.2% to 1.5 billion from 2016 to 2017, according to Airports Council International. Atlanta is especially busy, as an average of 275,000 travelers pass through Hartsfield-Jackson daily, and about 63,000 employees work there, according to the airport.
Apart from opening the branch, SunTrust will also place a video-enabled ATM and 16 standard ATMs at the Atlanta airport. SunTrust expects to have the branch up and ATMs up and running in time for the Super Bowl, which will be played on Feb. 3.
"Atlanta is our hometown and we look forward to expanding our reach to provide convenient banking services to the clients and visitors who travel through this great city," Mark Chancy, co-chief operating officer and consumer segment executive for SunTrust, said in a news release announcing the deal.
SunTrust would be one of just a handful of banks operating branches at airports. Others include Capital One Financial, which has a branches at Dulles International Airport in northern Virginia; BMO Financial, which has a branch in Milwaukee; M&T Bank, which operates a branch at Baltimore/Washington International Airport; and U.S. Bancorp, which runs branches in Seattle and St. Louis. Wells Fargo also has a branch in the airports in Las Vegas and Omaha.
In making the decision to close its Atlanta branch, Wells Fargo cited low transaction volume and weak deposit growth.
Airports also charge high rents. The Atlanta airport charged Wells Fargo about $1.7 million in annual rent, which included a cut of its ATM revenue, according to the Atlanta Journal-Constitution.
Expensive real estate may be one reason many banks eschew airport branches. JPMorgan Chase, for example, has no airport branches. Except for a branch at Miami International Airport, Bank of America focuses on placing ATMs inside airports. It is, for example, the exclusive ATM provider at Charlotte Douglas International Airport.
“Our strategy is to place ATMs in the busiest airports in our footprint, not branches,” said Betty Riess, a BofA spokeswoman.
Airports also prefer to lease space to other retailers instead of banks, such as restaurants or convenience stores, because they can partner with those retailers to share revenue, Voorhees said.
Still, some banks have decided that airport branches can serve as business development centers.
At least one other bank already uses its airport branch as a way to connect with consumers. At Toronto Pearson International Airport, Canadian Imperial Bank of Commerce instructs employees at its branch there to “act as brand ambassadors and engage with travelers in a number of ways, including informing clients about our financial services like credit card offerings,” said bank spokeswoman Olga Petrycki.
CIBC’s Toronto airport branch employees also provide general airport information to passengers, and roam around the airport to help direct clients to the branch, she said.
Some credit unions also want to connect with potential new customers through airport branches. The $4.7 billion-asset Wings Financial Credit Union, which was founded by Northwest Airlines employees, took over a branch from U.S. Bank at Minneapolis-St. Paul International Airport. Wings initially viewed the location, and the steep rent payments, as a reinvestment in its current membership, but soon found that it raised its visibility among business travelers, said John Wagner, senior vice president of member experience.
“A nice benefit of having a branch there is we get to do business with the small businesses that are in the airport, and that was new to us. We gained some business,” Wagner said. “The airport essentially is like a small city, and those businesses all have financial needs and we deal with virtually all of them now.”