2. CHAPTER EIGHTEEN Creating And Managing Service Outlets: New Charters, Branches, And Electronic Facilities
The purpose of this chapter is to learn how new banks are chartered by state and federal authorities in the United States, to determine what makes a good site for a new branch office, to recognize how the role of branch offices is changing, and to explore the advantages and disadvantages of automated banking facilities.

3. Responding to Changing Customer Demand
Chartering Completely New Banks
Establishing New Full-Service Branches
Setting Up Limited Service Facilities

4. Charters for New Banks
Office of the Comptroller of the Currency for National Banks
State Banking Commissions in the 50 States for State Banks

5. Benefits of a National Charter
Brings Added Prestige Due to Stricter Standards
In Times of Trouble, Technical Assistance May Be Better

6. Benefits of a State Charter
May Be Easier and Less Costly to Secure a State Charter
Bank Does Not Need to Join the Federal Reserve System
State May Allow Bank to Lend More of its Capital to a Single Borrower
May Be Able to Offer Wider Range of Loans and Other Services

7. Questions for Organizers of New Banks
Population and Geographic Boundaries of Primary Service Area (PSA)
Competing Financial Institutions in PSA
Number and Types of Businesses in PSA
Traffic Patterns in PSA
Population Growth in PSA
Banking History in PSA
Amount and Holders of Stock in New Bank
Business and Banking Experience of Organizers
Projections for New Bank in First 3 to 5 Years

8. Public Need
Organizers of New Banks Demonstrate Public Need for the New Bank By Showing That Local Banks Are Not Conveniently Located or That Existing Banks Fail to Offer Some Key Services

9. External Factors that Affect Decision for New Charter
Level of Economic Activity
Growth of Local Economic Activity
The Need for a New Bank
The Strength and Character of Local Competition in Supplying Financial Services

10. Internal Factors that Affect Decision for New Bank
Qualifications and Contacts of Organizers
Management Quality
Capital Pledged

11. Desirable Sites for New Branches
Heavy Traffic Count
Large Number of Retail Shops and Stores
Above Average Age of Local Populations
Area Contains Substantial Number of Managers, Business Owners and Professionals
Other Financial Institutions Not Increasing Rapidly
Above Average Population Growth
Above Average Population Density
Sufficiently Large Number of People in Service Area
Above Average Levels of Household Income

12. Expected Rate of Return
The Decision of Whether to Establish a Branch Office is a Capital Budgeting Decision. The Present Value of the Net Future Cash Flows Should Be Larger Than the Initial Outlay

13. Geographic Diversification
Reducing a Bank’s Overall Risk Exposure to its Total Return By Establishing Service Facilities in Different Market Areas Whose Individual Returns are Not Highly Correlated with the Returns from a Bank’s Existing Market Locations

14. In-Store Branching
Banking Offices Set Up Inside Retail Stores in Malls in Order to Reduce Construction Costs

15. Limited-Service Facilities
Point of Sale (POS)Terminals
Automated Teller Machines (ATMs)
Automated Loan Machines (ALMs)
Self-Service Terminals
Home and Office Online Banking

16. Decision to Add ATMs
The Bank Examines the Present Value of the Stream of Cash Savings from the New ATM Machine

17. Advantages of Using the Internet to Deliver Services
Low Cost Source of Information and Service Delivery
Customer Use is Measurable
Easier to Get Customer Feedback on Service Quality, Pricing and Problems

18. Disadvantages of Using the Internet to Deliver Services
Customer Privacy
Existence of Crime Problems
Bank May Not Get to Know Customers
Customers May Not Have Compatible Electronic Systems
Cost May Be Prohibitive for Some Customers

19. Ways to Promote Bank Customer Internet Use
Emphasize Safety
Promote Web Services Whenever Possible
Revise the Site Often to Retain Customer Interest
Should Survey Customers Often About Quality, Satisfaction and Availability of Services
Can Be Used to Promote Customer Dialogue with the Bank