CHAPTER 4

Establishing New Banks, Branches, ATMs, Telephone Services, and Web Sites

Goal of This Chapter: 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.

Key Topics in This Chapter

• Chartering New Financial-Service Institutions • The Performance of New Banks • Establishing Full-Service Branches and In-Store Branching • Establishing Limited-Service Facilities • ATMs and Telephone Centers • The Internet and Online Banking

Chapter Outline

I. Introduction A. The Importance of Convenience and Timely Access to Customers B. Service Options Available Today 1. Chartering New (De Novo) Financial Institutions 2. Establishing New Full-Service Branch Offices 3. Setting Up Limited-Service Facilities II. Chartering a New ( De Novo ) Financial-Service Institution III. The Bank Chartering Process in the United States A. The Chartering Authorities in the U.S. B. Benefits of Applying for a Federal (National) Charter C. Benefits of Applying for a State Charter
IV. Questions Regulators Usually Ask the Organizers of a New (De Novo) Bank
V. Factors Weighing on the Decision to Seek a New Charter A. External Factors 1. Level & Growth of Economic Activity 2. The Need for a new financial firm. 3. The Strength and Character of Competition in Supplying Financial Services
B. Internal Factors 1. Qualifications and Contacts of the Organizers 2. Management Quality