Bank Branches Still Key to Commercial Relationships Over Online Channel

by Joan Weber

www.riskcenter.com

Despite predictions that the advent of Internet banking would eliminate the need for small- and middle-market businesses to make regular trips to the local bank branch, the latest Greenwich Associates' Market Pulse Survey reveals that companies in these categories use their branches as frequently in 2006 as they did three years ago.

“Contrary to popular belief, bank branches and their locations have increased in importance for commercial customers over the past three years,” says Greenwich Associates consultant Robert Neuhaus. “Eighty percent of small business and commercial customers use their bank's branch at least once per week. Looking ahead, Check 21 and Remote Deposit Capture may reduce branch usage, but for now, local branch locations are retaining their considerable value to business banking customers.”

In its recent Market Pulse Survey, Greenwich Associates asked executives at 624 small businesses and 606 middle-market companies about their banking practices, financial service providers and their outlook on the U.S. economy. The research reveals that small businesses actually visit their banks' local branch more frequently today than they did three years ago. While the proportion of small businesses saying they used their branch bank once per week or once every two weeks declined from 2003 to 2006, the proportion saying they visited the branch every two to three days increased from one-third to 35% and the share saying they used their branch at least once per day rose from 33% to 37%.

“Even among middle-market companies, more than three-quarters use their bank's local branch at least one per week, and almost 40% visit it at least once every day,” says Greenwich Associates consultant Don Raftery.