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Archive for September, 2009

The new normal in branch activity

Thursday, September 24th, 2009

by Brian Diepold

Cross posted at

Among other effects, the current recession is likely to have an immediate and lasting impact on the branch deployment strategies in our industry. The immediate impact is fairly easy to predict. That is, net branch growth rate will decline significantly, most likely with some contraction over 2009 and 2010. But, what should we expect to see happen after the recession?

In the period just after past recessions, we have experienced a short-term spike in branch growth, likely due to some catch-up effects, followed by a return to the normal trend. It would be easy to assume that we could be in for the same kind of response after this recession.

But, I think there are several factors working against a return to the old patterns of branch growth. Most importantly, we have the ever-present alternative channel argument. While the maturing of remote banking may play a role in future branch growth, I believe that the dominant effect will be driven by overall residential development patterns.

If we look at the pockets of high branch growth over the past decade, much of the net new branches have logically followed the suburban development patterns. With every new McMansion development, branches followed to serve those communities. Unfortunately, many of those communities are being hit the hardest by the collapse of the real estate market. Prices are dropping much faster in the outer fringe development than they are in the urban core in many places. One could argue that these developments represent much of the excess inventory in the residential housing market today. As a result, it’s unlikely that we will see more of these developments popping up any time soon.

As the real estate market corrects itself, one of the numbers that is going back up is the percent of the population that rents instead of owning a home. Renters tend to reside closer in to the urban core in more densely populated parts of the market. Coincidentally, banks already have mature branch networks in these parts of the market. That is not to say there will be no new branches built, but simply that the decisions may move towards relocations, renovations, and need-based in-fill of the network, rather than continuing to grow with the residential development.

This is a unique recession, and as a result there will be unique events that unfold during the recovery period as well. One of them, I believe, is going to be a modest transformation of residential development patterns. We should see a move back towards more densely populated residential development. I don’t expect this to be a radical change, but as it changes on the margin, that should have an impact on where we look for new branch opportunities.

The result for branching is a new normal that probably doesn’t include a return to steady branch growth. There will be some branch growth, but I expect it to be more in line – finally – with household and population trends.

When two worlds collide

Tuesday, September 8th, 2009

By Steve Seabury


While the 2010 U.S. Census is still months away, a recent advance in data analytics demonstrates how amazing things can happen when customer and location intelligence comes together.


For years, real estate specialists and strategic planners have relied on spatial analysis to make decisions that required significant investments.  The power of location intelligence proved invaluable on many fronts.  The stability of neighborhood demographics enabled decision-makers to hone in on trends that could impact long-term profitability.  The precise nature of geocoding provided for year-over-year consistency.  Plus, the ability to visualize and map customers, prospects and competition against existing and planned sites let to key insights… insights that have enabled banks, retailers, utilities and many other industry executives to exceed expectations.


At the other end of the spectrum, marketers turned to household segmentation models.  Robust demographic data at the household level could be used to create clusters—segments of consumers who shared similar lifestyles, characteristics and needs. This lifecycle approach made it easy to target the ‘retired affluent’, ‘young families’, ‘single post-grads’ and dozens of other key markets.  And with records updated quarterly (or even more frequently), marketers could respond quickly to life events.


Now for the first time, these distinct approaches have been combined to deliver enhanced network performance management and customer analytics solutions.  Using deeper, more precise demographic data, organizations can make more informed and timely decisions about critical real estate and marketing initiatives. These next generation demographic data tools incorporate advantages from both disciplines and can help organizations overcome today’s top challenges, for example:


  • Enables marketers and strategic planers to work from the same platform
  • Compares changes in household make-up with neighborhood shifts to uncover pockets of opportunity
  • Normalizes household data to block out the noise of short-term events to create more accurate projections
  • Eliminates the need for ZIP Code targeting, which rarely reflect true neighborhood and lifecycle segments
  • Links store network performance with customer relationship management strategies


Of course, creating the best of both worlds requires you to start with the best in both worlds. That’s why Pitney Bowes Business Insight teamed up with the Gadberry Group and Acxiom® Corporation and their PersonicX® segmentation system.


These data sources compile consumer data from over 100 sources, including public records, the U.S. Census and self-reported data.  Measurements for accuracy and completeness are part of a sophisticated multi-source build process where individual data attributes are compared across multiple providers.  While mapping and analytic tools previously dealt with neighborhood and block-level data, these new tools drill down to race, ethnicity, gender, education, marital status, occupation, income and lifecycle on an individual household level.


In many ways, incorporating Gadberry and Acxiom data into PBBI predictive analytics models will enable organizations to bridge the gap between real estate decision-making and marketing strategy – incorporating the best of both.


For more information on the newest technologies, visit


Penn State

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