Much has been said recently about the waning use of bank branches. However, many commentators are missing the point - whilst we are using branches less frequently, when we do use them it is often for more valuable (important) interactions. It is how banks serve their customers at these times of need that will help differentiate their business from the competition.
The network effect is the phenomenon by which large branch networks capture a disproportionate share of market deposits. For example, a four-branch network captures more than twice the deposit volume of a two-branch network; an eight-branch network captures more than twice the deposit volume of a four-branch network. Viewed another way, average deposit size per branch increases as a function of the number of branches, as each incremental branch a financial institution adds provides a lift to — and derives benefit from — all its preexisting branches in the market