Article at a glance:

A future for bricks and mortar

Those who predicted the death of branch banking in the age of Web-based financial services have made a startling discovery: consumers prefer to do much of their banking the old-fashioned way. Studies show that the security, proximity, and personal service of a physical network provide strong competitive advantages over pure Internet banking. Even Charles Schwab, the pioneer on-line broker, now gets 70 percent of its new accounts through branch locations. The key for banks is to mix and match their telephone, on-line, and "landed" distribution channels to the needs of each segment of the markets they serve.

The take-away

Done right, electronic banking can increase the reach and reduce the costs of a banking network; done wrong, it can actually increase costs. The optimal distribution system gives customers a choice of channels, with comparable convenience and appropriate service for each of them.