Bank branch closures in New Zealand: the application of a spatial interaction model

Abstract Banking is going through a revolution that is radically altering the way banks work and the way customers use them. It is a revolution driven by global competition and enabled by technology. Unlike the back-room developments of previous decades, contemporary restructuring is directly affecting the network of bank branches and opportunities customers have to interact with them. Today virtually all retailing banks are seeking ways of reducing their extensive and costly network of branches and experimenting with alternative means of interacting with customers. Many of the difficulties of deciding what branches to close relate to predicting the impact of such closures on remaining parts of the bank’s network. The aim of this paper is to illustrate the application of a GIS-based spatial interaction model designed to help banks make that decision. Applied in the New Zealand context, it draws attention to some of the opportunities, as well as difficulties, a spatial interaction model creates in assessing the consequences of closing branches, both for the bank itself and for the wider community.

[1]  J. Veitch,et al.  Financial Transformation and the Metropolis: Booms, Busts, and Banking in Los Angeles , 1996 .

[2]  N. Thrift,et al.  Money, power and space , 1996 .

[3]  D. Huff.  A Probabilistic Analysis of Shopping Center Trade Areas , 1963 .

[4]  J. Pollard.  The contradictions of flexibility: Labour control and resistance in the Los Angeles banking industry , 1995 .

[5]  Ranald Richardson,et al.  The Impact of ‘Telemediated’ Services on Corporate Structures: The Example of ‘Branchless’ Retail Banking in Britain , 1996 .

[6]  Alan Wilson,et al.  Intelligent GIS: Location Decisions and Strategic Planning , 1996 .

[7]  M. Coombes,et al.  Mutuality, De-Mutualization and Communities: The Implications of Branch Network Rationalization in the British Building Society Industry , 2000 .

[8]  Andrew Leyshon,et al.  Geographies of financial exclusion: financial abandonment in Britain and the United States , 1995 .

[9]  N. Thrift,et al.  Money/Space: geographies of monetary transformation , 1998 .

[10]  J. Ford,et al.  Low-Income Households and Credit: Exclusion, Preference, and Inclusion , 1996 .

[11]  J. Dennis Lord,et al.  COMPETITION AND LOCATION STRATEGY IN BRANCH BANKING: SPATIAL AVOIDANCE OR CLUSTERING , 1981 .

[12]  R. Martin.  Money and the Space Economy , 1999 .

[13]  J. Gottmann,et al.  Global Financial Integration: The End of Geography , 1993 .

[14]  Lenny T. Mendonca,et al.  Branch banking is not a dinosaur , 1996 .

[15]  Jane S. Pollard,et al.  Banking at the Margins: A Geography of Financial Exclusion in Los Angeles , 1996 .

[16]  D J Pratt,et al.  Re-Placing Money: The Evolution of Branch Banking in Britain , 1998 .

[17]  D. Fuller,et al.  Credit Union Development: Financial Inclusion and Exclusion , 1998 .

[18]  Kevin Hall.  Banking goes virtual as the 'value network' evolves , 1996 .

[19]  Lawrence J. Radecki.  The Expanding Geographic Reach of Retail Banking Markets , 1998 .

[20]  D. Porteous.  The Geography of Finance: Spatial Dimensions of Intermediary Behaviour , 1995 .

[21]  A COMPARISON OF THE INTERNAL URBAN SPATIAL PATTERN OF UNIT AND BRANCH BANK OFFICES , 1973 .

[22]  Bank Marketing: A Guide to Strategic Planning , 1986 .

[23]  Jon Morris.  The internationalisation of banking, technological change and spatial patterns: a case study in South Wales , 1987 .

[24]  Anton C.M. Hopmans,et al.  A spatial interaction model for branch bank accounts , 1986 .

[25]  David L. Huff,et al.  Defining and Estimating a Trading Area , 1964 .

[26]  A. Leyshon.  Geographies of money and finance III , 1995 .

[27]  David Sibley,et al.  Geographies of Exclusion , 1995 .

[28]  S. Graham,et al.  Service not Included: Private Services Restructuring, Neighbourhoods, and Social Marginalisation , 1999 .

[29]  N. Thrift,et al.  Financial Exclusion and the Shifting Boundaries of the Financial System , 1996 .