Idaho banks keep investing in branches despite growth of online banking

Executives continue investing in brick and mortar despite the rise of online banking.

zkyle@idahostatesman.comJuly 23, 2013 

Northwest Bank CEO and President Rob Perez says he drives by all of the bank branches on Boise thoroughfares and wonders what customers ever go into them. There are 20 branches on Fairview Avenue alone.

"Why are there so many branches, given that most of the up-and-coming banking customers are perfectly content to do all their banking online or through some sort of teller machine?" Perez says. "Why do large institutions like Key Bank, Wells Fargo and U.S. Bank continue to build branches? I don't understand it."

Perez has tailored his business bank to cater to clients through its website and phone service. Northwest specializes in business and professional banking, which Perez acknowledges is less dependent on branches than most banks that use brick-and-mortar branches to collect deposits.

"Maybe the (physical branch) is for a consumer who is 65 and is used to going to the bank once a week to see if their deposit came in and maybe get a little money to send to the grandkids for birthdays," Perez says. " They aren't going to an ATM. They probably won't be using a PDA."

One customer who has moved to online banking is Peter Crabb, professor of finance and economics, at Northwest Nazarene University in Nampa. Crabb says he's surprised by the new branches that seem to sprout each month.

"I think Perez and others are right in that the technology is going to eliminate the need for those locations," Crabb says. "But apparently executives in those banks still see a demand. There are apparently (customers) who want to go to branch offices. I'm not one of them."

Idaho Central Credit Union continues to invest in brick and mortar, a strategy CEO Kent Oram says has been critical during the credit union's rise to become the largest financial institution chartered with the state. ICCU has 13 branches in the Treasure Valley and has built five of them since 2008. The newest branch opened in April in Eagle.

"People ask me why we build branches," Oram says. "Maybe we're a bit of an anomaly. We're trying to create a hometown feel. Even if you live in a larger city, you can come to a local branch and be one of 4,000 or 5,000 people who belong to that little community branch."

Zions First National Bank has 10 branches in the Treasure Valley region, which extends to Weiser. Toni Nielsen, president of the bank's Western Idaho region, says the bank's research has found one-third of its customers use branches as their only method of banking. Zions hasn't built any new branches in the Valley since the recession, but Nielsen says the bank still believes expanding its network of branches is the best way to serve its customers and turn a profit.

"It's a hot topic," Nielsen says. "We find the first criteria both consumers and business use in selecting a bank is proximity to a branch where they work, where they live or where they travel daily. We still think branches are very important to our business strategy."

Crabb says he expects to see fewer branches built in the future, but it hasn't happened yet.

"There's some factors I'm not seeing, because they are still building," Crabb says. "There are still all those banks on Fairview. There's still apparently a clientele that wants a branch."

Zach Kyle: 377-6464

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