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A branch, banking center or financial center is a
retail
Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesaler, and t ...
location where a
bank
A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets.
Because ...
,
credit union
A credit union, a type of financial institution similar to a commercial bank, is a member-owned nonprofit organization, nonprofit financial cooperative. Credit unions generally provide services to members similar to retail banks, including depo ...
, or other
financial institution
Financial institutions, sometimes called banking institutions, are business entities that provide services as intermediaries for different types of financial monetary transactions. Broadly speaking, there are three major types of financial insti ...
(including a
brokerage firm
A broker is a person or firm who arranges transactions between a buyer and a seller for a commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a principal party to the deal. Neither role should be confu ...
) offers a wide array of
face-to-face and automated services to its customers.
History and description
During the 3rd century banks in Persia (now
Iran
Iran, officially the Islamic Republic of Iran, and also called Persia, is a country located in Western Asia. It is bordered by Iraq and Turkey to the west, by Azerbaijan and Armenia to the northwest, by the Caspian Sea and Turkmeni ...
) and in other territories started to issue letters of credit known as Sakks, basically
checks in today’s language, that could be traded in cooperative houses or offices throughout the Persian territories. In the period from 1100-1300 banking started to expand across Europe and banks began opening ‘branches’ in remote, foreign locations to support international trade. In 1327, Avignon in France had 43 branches of Italian banking houses alone.
The practice of opening satellite branches was popularized in the early 20th century by
Amadeo Giannini
Amadeo Pietro Giannini (), also known as Amadeo Peter Giannini or A. P. Giannini (May 6, 1870 – June 3, 1949) was an American banker who founded the Bank of Italy, which became Bank of America. Giannini is credited as the inventor of many modern ...
, then head of the
Bank of America
The Bank of America Corporation (often abbreviated BofA or BoA) is an American multinational investment bank and financial services holding company headquartered at the Bank of America Corporate Center in Charlotte, North Carolina. The bank w ...
. Historically, branches were housed in imposing buildings, often in a
neoclassical style of architecture. Today, branches may also take the form of smaller offices within a larger complex, such as a
shopping mall
A shopping mall (or simply mall) is a North American term for a large indoor shopping center, usually anchored by department stores. The term "mall" originally meant a pedestrian promenade with shops along it (that is, the term was used to refe ...
.
Traditionally, the branch was the only place of access to a financial institution's services. Services provided by a branch include cash withdrawals and deposits from a
demand account
A transaction account, also called a checking account, chequing account, current account, demand deposit account, or share draft account at credit unions, is a deposit account held at a bank or other financial institution. It is available to the ...
with a
bank teller
A bank teller (often abbreviated to simply teller) is an employee of a bank whose responsibilities include the handling of customer cash and negotiable instruments. In some places, this employee is known as a cashier or customer representative. ...
,
financial advice
A financial adviser or financial advisor is a professional who provides financial services to clients based on their financial situation. In many countries, financial advisors must complete specific training and be registered with a regulatory ...
through a specialist,
safe deposit box
A safe deposit box, also known as a safety deposit box, is an individually secured container, usually held within a larger safe or bank vault. Safe deposit boxes are generally located in banks, post offices or other institutions. Safe deposit ...
rentals,
bureau de change
A bureau de change (plural bureaux de change, both ) (British English) or currency exchange (American English) is a business where people can exchange one currency for another.
Nomenclature
Although originally French, the term "bureau de chang ...
,
insurance
Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...
sales (where it is allowed by law), etc. In the early 21st century, features such as
automated teller machine
An automated teller machine (ATM) or cash machine (in British English) is an electronic telecommunications device that enables customers of financial institutions to perform financial transactions, such as cash withdrawals, deposits, fun ...
s (ATM),
telephone
A telephone is a telecommunications device that permits two or more users to conduct a conversation when they are too far apart to be easily heard directly. A telephone converts sound, typically and most efficiently the human voice, into e ...
and
online banking
Online banking, also known as internet banking, web banking or home banking, is an electronic payment system that enables customers of a bank or other financial institution to conduct a range of financial transactions through the financial inst ...
, allow customers to bank from remote locations and after business hours. This has caused financial institutions to reduce their branch business hours and to merge smaller branches into larger ones. Conversely, they converted some into ''mini-branches''
with only ATMs for cash withdrawal and depositing; computer terminals for online banking and
cheque
A cheque, or check (American English; see spelling differences) is a document that orders a bank (or credit union) to pay a specific amount of money from a person's account to the person in whose name the cheque has been issued. The pers ...
depositing machines. Some mini-branches may have one or no human staff with only telephone support.
Some financial institutions, in an attempt to show a friendlier image, offer a
boutique
A boutique () is a small shop that deals in fashionable clothing or accessories. The word is French for "shop", which derives ultimately from the Ancient Greek ἀποθήκη (''apothēkē'') "storehouse".
The term ''boutique'' and also ''d ...
or
coffeehouse
A coffeehouse, coffee shop, or café is an establishment that primarily serves coffee of various types, notably espresso, latte, and cappuccino. Some coffeehouses may serve cold drinks, such as iced coffee and iced tea, as well as other non-ca ...
-like environment in their branches, with sit-down counters, refreshments, interactive displays, music and playing areas for children. Some branches also have
drive-through
A drive-through or drive-thru (a sensational spelling of the word ''through''), is a type of take-out service provided by a business that allows customers to purchase products without leaving their cars. The format was pioneered in the United ...
teller windows or ATMs. Other financial institutions reduce their costs and position their offerings by having no branches and are sometimes known as
virtuals or
direct bank A direct bank (sometimes called a branch-less bank or virtual bank) is a bank that offers its services only via the Internet, email, and other electronic means, often including telephone, online chat, and mobile check deposit. A direct bank has no ...
s.
Legal restrictions in the United States
Historically, branch banking in the United States—especially interstate branch banking—was viewed unfavorably by regulatory authorities, who correctly foresaw the risk of banks becoming
too big to fail
"Too big to fail" (TBTF) and "too big to jail" is a theory in banking and finance that asserts that certain corporations, particularly financial institutions, are so large and so interconnected that their failure would be disastrous to the great ...
. This regulatory hostility was codified with the enactment of the
McFadden Act
The McFadden Act is a United States federal law, named after Louis Thomas McFadden, member of the United States House of Representatives and Chairman of the United States House Committee on Banking and Currency, enacted in 1927 from recommendation ...
of 1927, which specifically prohibited interstate banking. Over the next few decades, some banks attempted to circumvent McFadden's provisions by establishing bank holding companies that operated so-called independent banks in multiple states. To address this, The
Bank Holding Company Act of 1956
The Bank Holding Company Act of 1956 (, ''et seq.'') is a United States Act of Congress that regulates the actions of bank holding companies.
The original law (subsequently amended), specified that the Federal Reserve Board of Governors must appr ...
prohibited bank holding companies headquartered in one state from having branches in any other state.
Most interstate banking prohibitions were repealed by the
. Research has also found that anticompetitive state provisions restricted out-of-state growth when those provisions were more restrictive than the provisions set by the Interstate Banking and Branching Efficiency Act or by neighboring states. Some states have also had restrictive bank branch laws; for example, Illinois outlawed branches (other than the main office) until 1967, and did not allow an unlimited number until 1993. Texas historically has heavily restricted the operations of banks. For example, it was not until 1980 that Article XVI, Section 16, of the Texas Constitution was amended to permit banks to have unmanned teller machines (
ATMs) in the county of its domicile.
Types of branches
Instore
These are typically branches located in a retail space such as a
grocery
A grocery store ( AE), grocery shop ( BE) or simply grocery is a store that primarily retails a general range of food products, which may be fresh or packaged. In everyday U.S. usage, however, "grocery store" is a synonym for supermarket, an ...
,
shopping mall
A shopping mall (or simply mall) is a North American term for a large indoor shopping center, usually anchored by department stores. The term "mall" originally meant a pedestrian promenade with shops along it (that is, the term was used to refe ...
s or
discount store
A discount store or discounter offers a retail format in which products are sold at prices that are in principle lower than an actual or supposed "full retail price". Discounters rely on bulk purchasing and efficient distribution to keep down cost ...
. They may be full service branches or limited service branches. They generally do not include drive-through teller windows or safe deposit boxes. These branches may have limited staff and typically include technology as a means to deliver banking services such as the use of
automated teller machines
An automated teller machine (ATM) or cash machine (in British English) is an electronic telecommunications device that enables customers of financial institutions to perform financial transactions, such as cash withdrawals, deposits, fun ...
,
videoconferencing
Videotelephony, also known as videoconferencing and video teleconferencing, is the two-way or multipoint reception and transmission of audio signal, audio and video signals by people in different locations for Real-time, real time communication. ...
, and
video banking Video banking is a term used for performing banking transactions or professional banking consultations via a remote video connection. Video banking can be performed via purpose built banking transaction machines (similar to an Automated teller mach ...
systems.
Foreign bank branch
A type of foreign bank that is obligated to follow the regulations of both the home and host countries, operating in the country. regulated by the Office of the Superintendent of Financial Institutions.
References
{{Authority control
Branch (banking)
A branch, banking center or financial center is a retail location where a bank, credit union, or other financial institution (including a brokerage firm) offers a wide array of face-to-face and automated services to its customers.
History and ...