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Bank Switchers, Branch Locations and ‘The Five-Mile Rule’

More than half of consumers shopping for a new bank only want to compare institutions that fall within 5 miles of their location. But there’s a big difference between urban and rural shoppers.

By Rob Rubin, Managing Director, Novantas

Today, most consumers prefer to do research online when they’re shopping for a new checking account or banking relationship. The internet enables people to cast a wide net and investigate all options available to them. FindABetterBank (a Novarica website) attracts consumers who use search engines precisely for this task. The comparison tool on FindABetterBank lets shoppers control how wide a net to cast by defining the radius of their search.

In Q2 2013, more than half of shoppers only want to compare institutions that fall within 5 miles of their location. Only 7% of FindABetterBank shoppers wanted to compare institutions within 50 miles of their location.



In a very densely populated part of the country, branch locations are likely the most important criteria when switching banks. But people who live in more rural communities are most likely to cast a wider net.

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Why is this? One hypothesis is that people who live in rural communities have less income and are more likely to choose an account based on fees. But data from FindaBetterBank shoppers doesn’t support this. People who search further afield indicate they maintain higher account balances than shoppers searching within  1-5 miles of their location.

Another hypothesis is that people who live far from branches are most interested in using technology (e.g., mobile banking) to bridge the gap. Yet, there’s little difference in the percent of shoppers who “must have” mobile banking when comparing responses by the radius of their search.

The explanation is most likely simpler: People who live “in the middle of nowhere” are accustomed to driving long distances for everything — from buying milk and going to the post office to banking — and therefore are less sensitive to branch proximity.

Does anyone have a different explanation?

Insights from Rob RubinRob Rubin is Managing Director of Novantas Data Services. His research leverages insights captured from thousands of bank shoppers every day while they are actually thinking about- and in the process of shopping for a new bank.

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  1. Thanks Rob. This is great information. For as long as I can remember, research reports I’ve come across have shown that U.S. consumers choose their institutions based on the convenience of their locations. Many say they chose their bank because they could park there, because they saw a branch down the street, or because they know they have branded ATMs everywhere.

    I work for Andera and talk a lot with banks and credit unions about how to acquire more customers and members online. I wish banks – and especially credit unions – did a better job of promoting their locations, particularly fee-free ATM locations.

    Consumers are so misinformed and believe that Bank of America offers the most free ATMs when that is far from the case. When I visit most institution’s websites, their ATM/branch locator isn’t heavily promoted and even when those tools exist, the locator pages do little to tout the breadth of their network. Credit unions have a unique advantage here since many of the ones we work with reimburse fees for ATMs. This is a huge benefit and one that I wish consumers were more aware of.

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