I understand that Chase bank is doing away with safe deposit boxes at its banking location nationwide. I suspect that this will drive many customers to move their accounts to other banks. From the investment point of view, it would seem that the safe-deposit box business is a cash cow. The investment has already been made the vault and boxes, no extra labor is involved in offering this service to customers all profit from a sunk cost item. Can anyone suggest a “business reason” for this move?
I couldn’t find an explicit press release from Chase announcing that, but their box lease agreement, updated January 22, says they are not renting new boxes.
Other articles note that Capital One quit offering boxes some years ago, and new branches typically are built without them.
Different bank drop different services. Bank of America branches around here no longer have drive up banking.
I’m sure each bank has bean counters measuring the profit of every service they offer, and the lowest profit per investment or running costs is dropped.
Steve
Bank of America no longer has had drive ups here in Arizona for Several years. However, a drive up requires staffing. So closing them reduces labor costs. The investment in existing safe deposit facilities has already been made, with no way to sell or dispose of the equipment. Once again, there is no added labor cost for a customers “personal banker” to give the customer access to their box. Also, I suspect that the type of customer who rents a box is a good demographic for the bank. One who has jewelry, car titles, property deeds, collectibles, passports, and the other items that they want to store safely. My local Chase bank actually expanded its building several years ago so they could install safe deposit boxes. Not a minor investment. My personal banker told me there was a high demand from higher income customers for this service in this retirement community. It has to be a “cash cow.”
However, a drive up requires staffing. So closing them reduces labor costs.
At BoA, before they dropped drive up service, and at 5/3rd, the tellers that staff the windows in the lobby run back and forth between their windows and the drive up desk. In a 5/3rd branch that was newly built a few years ago, the pneumatic tubes from the drive up come out right behind the lobby tellers, so they don’t need to move more than a couple steps. Closing the drive up window increases lobby traffic, so the teller work load only shifts. I’m not in PNC enough to observe how they run their drive-up.
I did have a box, some twenty years ago. I noticed that, while the branch looked like it has been built in the 70s, the boxes were in a housing that looked ancient, on the order of 1920s or 30s, that must have been moved there from a closed branch. That branch was closed and torn down maybe 15 years ago. I haven’t checked to see if any other branches I use have boxes.
Also, I suspect that the type of customer who rents a box is a good demographic for the bank. One who has jewelry, car titles, property deeds,
Judging by the signage I see in bank lobbies, that isn’t the business banks are seeking. They are trying to sell loans and “investment products”. That is what got Charles Keating in so much trouble, using his S&Ls to pedal “investment products”, and misrepresenting their risk.
Why not fire off an e-mail to shareholder relations, see if you can get an answer out of them, other than “that was the judgement of upper management”.
Steve
Judging by the signage I see in bank lobbies…
Can’t remember the last time I was in a bank lobby. I’ll venture a guess that it may have been 10-15 years ago.
'38Packard
- not a fan of banksters
I understand that Chase bank is doing away with safe deposit boxes at its banking location nationwide. I suspect that this will drive many customers to move their accounts to other banks. From the investment point of view, it would seem that the safe-deposit box business is a cash cow. The investment has already been made the vault and boxes, no extra labor is involved in offering this service to customers all profit from a sunk cost item. Can anyone suggest a “business reason” for this move?
It may be part of a longer-term strategic move to reduce the number of branches, reducing overhead from brick & mortar facility costs, as well as the labor costs involved with more branches. By phasing out safe deposit boxes - or the number of locations that have them - they may cause customer irritation now, but less disruption if they eventually close that branch?
I was surprised to read that Bank of America doesn’t have drive-up facilites any longer? We don’t have Bank of America in Wisconsin, so wasn’t aware of that. But Chase has a large presence, since their takeover of Bank One, maybe 20 years ago now.
And in Wisconsin reducing branches would go against the current grain, as credit unions are expanding and building new locations like mad. And we might see more mini-branch banks in the larger grocery stores.
Bill
And in Wisconsin reducing branches would go against the current grain, as credit unions are expanding
I used to live in Kalamazoo, MI. Opened an account in Kalamazoo at Michigan National. MN was taken over by Standard Federal. Standard Federal was taken over by LaSalle. LaSalle was taken over by Bank of America. There was a lot of overlap of branches between Standard Fed and MN, in both Kalamazoo, and metro Detroit, where I live now, so a lot of branches were closed.
Anyway, BoA apparently decided it doesn’t want to have a presence anywhere but the largest markets in Michigan, so all the branches in Kalamazoo, and other small towns in SW Michigan, were sold to a little bank in Indiana.
The branch sales are part of a larger Bank of America plan to trim back its branch network, Wagner said.
By selling branches to a regional bank rather than closing them, Bank of America could rid itself of those locations without laying off employees or forcing customers to find a new bank, Wagner said.
https://archive.courierpress.com/business/old-national-to-bu…
I follow a “Vanished Kalamazoo” page on Facebook. The commentary on the page following the announcement that another well known building is being torn down is “they’ll probably build another credit union on that spot”.
My takeaway is the largest banks, the “Too Big To Fail” in 2008, are not that interested in retail banking, so credit unions are filling the void, as the TBTF cull their high cost, low profit, operations.
Steve