You know how many banks out there have multiple branches across the nation, even some banks have their branches overseas? Right? Well, that’s what we call branch banking when a bank has more branches across the nation, away from its main location. Nothing too special about it, but sure, it is the way forward for banking, like if the banks want to reach more and more customers, then branch banking is a super convenient and easy way to do just that. If you want to get to know more about what branch banking is, how it works, and why it exists in the first place, then you should definitely get to know about the branch banking advantages and disadvantages. Well, that is precisely what we’re up to today, so, let’s just get to that right away then.
Advantages of Branch Banking
1. It’s Super Convenient for Everyone
One thing no one can’t deny is that branch banking is literally super convenient for everyone, not just for the customers, but it is convenient for the banks as well. Banks usually put branches where people live, work, or shop around, and this way, banking is supper accessible no matter what. This also is a good thing for the banks too, like, more customers means more profits for them as well.
2. Saves Money in a Clever Way
At first, it might cross your mind that running just one big bank branch is less expensive than multiple small branches across the nation, right? But it is actually the exact opposite, you see, you’re neglecting the part where more branches help attract more customers, so, ultimately it saves money in a clever way, you know?
3. Keeps the Bank Safe from Big Trouble
See, unfortunate things happen and things often go southways, like, there is one bad year for a specific locality and people can’t pay back their loans. What then? Well, nothing, since these days most banks are involved in branch banking, this doesn’t affect these banks that much. Like, the interest they make on other loans from other towns, cities, or states can cover up things easily.
4. Makes Customers Feel Special
Since it is not just one big bank branch that is handling millions of customers, people can feel a bit special when visiting the local bank branches because that bank branch is only for that locality. Customers can come, sit down, ask questions,and get advice, and that’s how they can feel special in these bank branches because the bank people can handle them very well since they’re working with a decent pool of customers, not millions of them.
5. Moves Money Around In A Clever Way
With branch banking, it is often the case that some branch out there makes more money than others. So what? Well, if something like this happens, the branch that has extra cash, usually helps out the other branch where things need a little helping, you know, maybe people in that locality need more help buying houses, starting businesses, or things like that.
6. Creates Jobs for Your Neighbors
How exactly? Well, more bank branches means more people are needed to run things properly and smoothly, right? So, yes, the equation is pretty simple right there. These so many bank branches create a lot of jobs, simple as that!
7. Makes People Trust the Bank More
Just take it upon yourself, would you trust a bank that has only a few branches across the nation? Probably not, right? Well, that’s just because we link the branch numbers with how big the bank really is, and that’s just a good indicator of how well the bank is doing.
Disadvantages of Branch Banking
1. Costs a Ton of Cash to Keep Going
It is not a hard thing to understand that when you have so many branches, it costs you way too much just to keep them running. Like, there are all sorts of bills to pay and things like that. Well, there is nothing that banks can do about it other than just optimizing things a bit, after all it is the cost of staying in the business.
2. Big Banks Might Take Over Everything
Big banks usually have more branches everywhere, and often, they kinda become a bit of a bully, you know? Some banks with branch banking become so big that small banks can’t even keep up with the competition, and that’s not a good thing at all. Ultimately, it is not a good thing for us customers.
3. Some Places Get Left Out
Not all banks do this, but it happens that some banks take money from a small town bank branch and send it to a big city where they can make more profits by giving out more and more loans and other banking products. In the end though, yes, it is true that this can leave quieter areas feeling ignored, and it’s not fair for the people who live there.
4. Bosses Can’t Make Quick Moves
If you’re a manager at a bank branch, it is not just you who controls everything, like if you get a chance to help out the town by giving out more loans, it is not you who says “yes” to everything. You’ll certainly need permission from the backend before you do anything.
5. Stuck with Branches That Don’t Work
Sure enough, some bank branches do much better than others, and then there are some bank branches that are kinda just keeping up and not making that much profit. These just somehow become an extra load on the bank itself.
6. Sneaky/Shady Stuff Can Happen
When the branch network of a bank is so big, there is often the case when some shady or sneaky stuff goes on in some of the branches because that’s how some people are. It is super hard to keep a sharp eye on every single bank branch, so that’s why the reputation of a bank is always on the line.
Conclusion
That’s all there is for now. You see, branch banking is one of the greater aspects of why banks grow these days because this way, banks can reach more and more customers, not just in one nation but all around the globe. Sure, there are challenges that come with branch banking too, but that’s the case pretty much with everything else in life, right?
