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Are bank branches becoming extinct?

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The number of U.S. bank branches that were open for business at the end of 2009: 99,564.

Yet despite that large number of locations, the use of branches as a preferred way to conduct banking business is on the wane, according to a survey by the American Bankers Association, or ABA, a trade group in Washington, D.C. The survey, conducted in August 2009, found that online banking had surpassed branch banking as preference for the first time, though by a small margin.

Yet bank branches aren’t on their way to extinction, says ABA spokeswoman Carol Kaplan. Rather, branches will continue to exist as an option for bank customers.

“Banks are a service industry,” Kaplan says, “and they are going to provide access to numerous channels to keep customers happy.”

Bank branches offer in-person service

Some people prefer to go into a branch to conduct most or all of their banking business. This preference is especially prevalent among those who are older than 55, according to the ABA survey.

Frequent bank-branch visitors feel more secure having face-to-face interaction, need help to conduct complicated transactions or want the additional service they can obtain in person, Kaplan says.

Other people, especially those of younger generations, tend to use multiple channels for different banking services, according to Anne Pace, a spokeswoman for Bank of America, which has the nation’s largest branch network at 6,000 locations called “banking centers.”

“Customers want to pay their bills (online) for convenience. They are using mobile banking to check their balances. They are using ATMs to deposit their checks,” she says. “The banking center is becoming more and more a place not only for basic transactions, but for people to discuss complex issues.”

A visit to a branch may also be in order for other reasons: to pick up foreign currency, access a safe-deposit box, purchase a money order, deposit a large sum in cash or apply for a loan.

Branches offer specialty services and accounts

Bank branches exist to provide services, so it’s a good idea to find out what a bank offers. Many customers don’t know that banks offer wealth management services and can act as legal fiduciaries. Banks also offer specialty accounts such as trust accounts, college education funds and health savings accounts, or HSAs.

“Look around the bank and ask the tellers when you go in to make sure you are taking full advantage of everything they have to offer,” Kaplan says.

Customers should be aware that not all financial products offered at bank branches are insured by the Federal Deposit Insurance Corp., or FDIC, a government agency that protects depositors from losses, up to certain limits, if a bank goes out of business. Examples of products that are not FDIC-insured include investment accounts, annuities and life insurance. If in doubt, ask for details.

Banks may say no to lots of coins

Not all banks accept large quantities of loose coins as deposits, so it’s smart to find out the bank’s policy before you lug a milk jug of spare change into a branch, Kaplan says.

Contrary to popular belief, banks aren’t obligated to accept large quantities of coins, even though they’re legal U.S. currency, because it’s “not economically feasible,” to use Kaplan’s words, for banks to count everyone’s coins. Some branches have a coin-counting machine that can sort coins into denominations and total the amounts. This service may be offered free or for a fee.

Fridays are naturally high-traffic days at many bank branches due to paycheck deposits, according to Pace. If you don’t want to wait in line to speak with a teller, avoid this day of the week.

Branches may open, close to meet demand

It’s not unusual for banks to open additional branches if they perceive an opportunity to get more business in a certain area or to close branches if demand is low or they acquire a competitor that also has branches nearby. Bank of America, for instance, has closed some banking centers for both of those reasons.

“In some cases, we had banking centers within a mile radius of one another. It didn’t make sense to have two that close together,” Pace says.

Many people choose a bank based on the convenience of the branch locations or because their parents were longtime customers. But those who aren’t satisfied with a bank’s services or quality of service do have choices, 99,546 of them, to be exact.