Canadian banks, faced with extensive losses over last summer's subprime mortgage issue and an uncertain North American economy, are continuing to push forward with aggressive branch-expansion plans started last year.
"Time is proving that was and is the right approach in the right year," says Diana Chant, financial services leader for PriceWaterhouseCoopers (PwC) in Toronto. "People have to realize that different banks have different channels and it's not necessarily one or the other. In order to be successful they need a multi-pronged strategy.
"As the Baby Boomers start to retire, banks need to look at how to best serve certain customers in a certain age group and demographic. That should ideally involve a combination of bank machines and branches."
Chant says banks are also retooling their channel strategy to reflect Canada's growing ethnic population.
For example, one bank now offers automated teller machines that communicate in English, French and Chinese.
Almost a decade ago, some experts noted banks were almost abandoning their branch networks in favour of the more cost-effective Internet and telephone banking channels. But that changed when sales of lucrative products including loans, mortgages and wealth management started to slip.
"You will probably always have branches and need them. People value that one-on-one personal relationship," says Chant.
Royal Bank of Canada has the largest network across the country with 1,146 branches and plans to renovate 525 over the next three years, spokeswoman Beja Rodeck confirmed in an e-mail. She says 30 branches were opened in 2007 and 35 are scheduled for 2008.
Most of the new RBC branches are being planned for Ontario and Alberta, where residents are already starting to notice their new neighbours. RBC officials opened three new branches in Edmonton late last year complete with expanded hours and an automated teller machine in a drive-through lane.
According to an RBC press release, the branches were powered by clean, renewable energy from Bullfrog Power and were part of a strategy to open 20 new Alberta branches, mostly in Edmonton, by 2010.
"We're not slowing down or cutting back by any means," Rodeck added.
Bank of Montreal continued with its 2006 acquisition of Portuguese-owned bcpbank Canada last year and converted eight Toronto-area branches into BMO-branded locations. They were part of 12 new branches the bank opened in Ontario last year, with another 12 branches "relocated to new premises," according to a spokesperson.
Details including the number of branches they were opening across Canada and how many were planned for this year were not available.
TD Bank officials went ahead with the 38 branches they had planned for across Canada last year and were on schedule to open another 30 in 2008.
"Branches have always been an important part of our strategy when it comes to how we interact with our customers," said the bank's Toronto-based spokesman Nicholas Petter.
Scotiabank opened 15 new branches in 2006, including 10 National Bank of Greece locations it had previously acquired from National Bank of Greece SA. Another 35 branches were opened in 2007, says senior manager of public affairs Ann DeRabbie. She did not disclose how many they were planning to open this year.
Scotiabank also unveiled plans earlier this month to offer a savings account in Euro currency. Account holders can make deposits and withdrawals at any branch, but they cannot use bank machines for transactions.
A CIBC spokesperson said the bank declined to discuss its branch-expansion strategy. The bank did, however, issue a press release earlier this month on one of its branch openings in Belleville, Ont.
The press release explained this new branch was "part of CIBC's strategic plan to build, relocate and expand over 70 new branches across Canada by 2011."
While Canadian banks have been converting locations they bought from foreign-owned competitors, everyone seems to have lost interest in the idea of bank mergers, says Chant, at PwC.
"I don't believe bank mergers are high up on the government's priority list right now and banks have moved on in their strategy," she adds.
"Right now, they are more trying to individually forge their strategy for growth rather than together," she says.
Meanwhile, three Alberta credit unions announced earlier this month they were involved in merger discussions. Common Wealth, Servus and Community Savings - three of the province's four biggest credit unions - released a statement saying they were all interested.
The biggest difference with credit unions is their ownership structure, says Art Chamberlain, a spokesman for the Credit Union Central of Canada. Credit union account holders pay a membership fee, which allows them to vote on key management issues and participate in profit-sharing.
Credit Union Central of Ontario is in merger negotiations with Credit Union Central of British Columbia. But merging the two provincial umbrella organizations would not undermine Credit Union Central of Canada, says Chamberlain.
"We're more of a national trade organization whereas they're more provincial in nature," he explains.
In Alberta, the combined three credit unions will have 93 branches in 67 communities, serving close to 400,000 members, Community Savings president and CEO Murray Haubrich told Business Edge.
"We felt all of us had very complimentary styles and it would be a good partnership. There wasn't a map sent out for everyone to look at, but none of our branches (geographically) overlap with each other," he says.
Haubrich adds because of the credit unions' membership structure, customers are not as concerned about high rates and fees as they would be with banks. Last year, he says, Community Savings's 110,000 members received a total of about $14.5 million in cash as their share of the profits.
"This will give us a significant market share, especially in smaller rural Alberta communities," says Haubrich. "But we have nowhere near the market share of the big banks. " (David Hatton can be reached at hatton@businessedge.ca)
