Home is where the branch is, according to recent research from Lombard, Ill.-based Raddon Financial Group. The survey of 1,200 U.S. households found that having branches convenient to where customers live and work is central to not only winning customer accounts, but also to retaining those accounts and maintaining higher deposit balances.

"Convenience is the key to building checking accounts, which makes customers loyal and banks profitable," said Bill Handel, Raddon's vice president for research. He spoke during a February 15 teleconference entitled "Branch Performance: Evaluating Competitive Growth Strategies" hosted by Tampa-based OnsiteConference.

Three-quarters of consumers in Raddon's fall 2006 survey reported that their primary financial institution is located nearest to their home (57%), their office (15%) or an equal distance from both (18%), Handel said. And seven out of 10 consumers have a primary banking relationship with a bank that's within less than three miles of their home or office; 30% say their bank is less than one mile away, he said.

The 44% of customers whose branch was located within one mile of their home or office typically account for 52% of a bank's deposits and 46% of its profits, Handel said. Customers who find their branches are more conveniently located also tend to keep higher core balances - $12,076 on average for those customers who are within a mile of their bank, compared to $9,776 for those who were just under seven miles away, he added.

Meanwhile, those customers without a nearby branch are 85% more likely to let their checking accounts sit dormant, Handel said.

In spite of the growing popularity of online services and ATMs over the past decade, Handel said that the percentage of bank customers who conduct business in the branch lobby has declined by only one percentage point in the last six years, Handel said. Raddon found that 56% of consumers still say that either the branch lobby or the drive-up window is the channel by which they most frequently access their primary institution. (Only 13% said it was via the Web.)

"Even as we've built this massive online infrastructure, the vast majority of consumers still place great stock in branches," Handel said.

However, branch convenience has little or no impact on whether customers use a bank's certificates of deposit and is actually inversely correlated with loan usage, meaning that customers are more likely to access loans from banks that do not necessarily have branch locations near them, he added.

Handel said the checking account typically determines which bank customers consider their "primary" financial institution. And that, in turn, drives deeper relationships and cross-sales, he said.

According to Raddon, 44% of consumers said that they opened a checking account within the past five years, compared to only 12% opening a CD and 11% obtaining an auto loan or personal loan. Handel said net new checking accounts opened per branch is a good metric by which to measure the relative success of a bank.

Case in point: Seattle-based Washington Mutual Inc. of Seattle opens 39 new checking accounts per month per branch and Charlotte-based Bank of America Corp. 31, compared to just seven for most community banks, according to Raddon.

(For more on the science - and art - of branch location, see "The Laws of Customer Attraction" in the March/April 2006 issue of BAI's Banking Strategies.)

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