BranchInfo 2010 BranchInfo 2010 BA

Tuesday, May 31, 2011

Are Cellphones Safe, Part 2

Today, the World Health Organization via the International Agency for Research on Cancer (IARC) classified radiofrequency electromagnetic fields as possibly carcinogenic to humans, based on an increased risk for glioma, a malignant type of brain cancer associated with wireless phone use.

Dr Jonathan Samet of USC, the overall Chairman of the Working Group, indicated that "the evidence, while still accumulating, is strong enough to support... the conclusion that there could be some risk, and therefore we need to keep a close watch for a link between cell phones and cancer risk."

"Given the potential consequences for public health of this classification and findings," added IARC Director Christopher Wild, "it is important that additional research be conducted into the long‐term, heavy use of mobile phones. Pending the availability of such information, it is important to take pragmatic measures to reduce exposure such as hands‐free devices or texting. "

Considering that the number of cellphone users is approaching 5 billion people, any such empirical finding is plenty scary.  Many of us have been reporting this for a long time now.  Are you all getting concerned yet?

Friday, May 27, 2011

Banks Have PayPal In Their Sites, As Google Goes NFC

Looks like the big three banks, where one-in-three Americans have their checking account, want in to PayPal's gold mine.  No kidding.

Wells Fargo, Bank of America and Chase announced clearXchange on Wednesday, their new joint venture to let customers move money around with just a mobile number or email address.

We won't see it until next year.  Too bad, because this will put fee pressure on PayPal - they'll probably be giving away clearXchange to obtain trial, then charge after it proves its value.  Like debit, consumer protections remain far better with a credit card.  Tests will be in Arizona, which has always been where they test electronic banking.

Thursday, Google announced their NFC play with partner CitiCorp that will let consumers "tap, pay and save".  NFC or Near Field Communications is the short-range wireless technology that lets you wave your NFC enabled phone near a payment terminal in a store or gas station and pay for something.  "Google Wallet" will also feature LBS a la Foursquare, so you'll get coupons from partner merchants pushed at you based on location.

BUT.  It will start out being available only on Nexus S 4G by Google, available on Sprint, and will work only with MasterCard PayPass terminals, a fraction of the NFCs deployed.  Google will begin initial testing of Google Wallet in New York and San Francisco.

All of this is a good thing.  It will reduce friction in payment systems by reducing costs and fees - especially for person to person payments, where the high cost of wire transfers today is what has made PayPal such a success.  And it is interesting that Citi seems more interested in owning traditional bank turf - merchant payment terminals - while the clearXchange banks stake their place in the new firmament, online and mobile payments.

Monday, May 23, 2011

Characteristics of Closed Bank Branches - Trade Area Lifestyles

Last week, we began our analysis of closed bank branches, suggesting that the next steps are profiling the trade areas involved, in terms of demography and lifestyle, business mix, primary site characteristics and several other key metrics.

Demography and lifestyle turns out to be quite telling.  Using ESRI Tapestry, we find that the top 5 of the 65 Tapestry segments account for over 42% of these trade areas. 

Laptops & Lattes are nearly 16 times as likely to be in one of these trade areas than in the U.S. as a whole; Metro Renters, nearly 12 times as likely.  Further, 4 of the 5 segments are in the Solo Acts lifemode or uber-category.  We also note that of 11 Urbanization areas, 45% are in just one, Principal Urban Centers I.

And, the plot thickens.

Average household size is quite small, at just 2.19 - reflecting all those Solo Acts.  And income is upscale, at a median AHI of nearly $60,000.  Though 58% of occupied units are renters, those who do own homes have home values well above the U.S. average.  The trade areas are also about 2/3 White.

Not exactly what one might have expected.  That is, until you consider that the people we are talking about - young upscale singles and couples and some very young families - don't rely on branches to do their banking.  So, while they are dynamite prospects for financial services - just the kind of people that American Express targets and courts early and often - branches may not necessarily be the way to make them customers.

That is, branches as we now know them.

Tuesday, May 17, 2011

Netflix & BitTorrent Eat Half The Internet

Sandvine reported today that Netflix traffic has increased nearly 50% over the past year, and now accounts for what is approaching one-third of peak-time North American traffic (30%) and one-quarter of daily traffic (22%).

Add the 22% of daily traffic that is BitTorrent, and the trend towards broad proliferation of smart mobile devices, and you realize that video and streaming content will very soon dominate.

Sandvine reports that "Real-Time Entertainment traffic is continuing its journey to network dominance, particularly in North America, where it represents 49.2% of peak period fixed access traffic. If this rate of growth is sustained, Real-Time Entertainment will make up 55-60% of traffic by the end of the year."

In Europe, about 33% of peak access is Real-Time Entertainment, while in laptop-dominated Latin America, P2P uploads are now nearly half the traffic.

And everywhere, people watched William and Kate Get Married.  In another Sandvine report, we find that Real-Time Messaging Protocol (RTMP) traffic doubled, and global video traffic in general surged to 26% above normal levels, peaking during the wedding ceremony itself.  Traffic on the social media sites Twitter and Facebook peaked 30% and 10%, respectively, above normal levels and local peaks corresponded with highlights of the wedding coverage.

Cable/fiber television operators, be afraid.  Be very afraid.  Ditto, corporate nets.

Monday, May 16, 2011

Analyzing Characteristics of Closed Branches

Along with the decision of when and where to open a new branch office, one of the key decisions made by banking administrators is when and where to *close* a branch office. We decided to take a look at recently closed branches in order to identify what common characteristics we might be able to identify.

BranchInfo by RPM Consulting

To conduct our analysis, we used the most current version of BranchInfo. RPM's BranchInfo competitive bank branch database  tracks not only branches that are currently open, but also branches that have been closed since the last data update. The current version of BranchInfo, released in February 2011, contains bank branch locations and ownership as of February 15, 2011, as well as branches which were closed between July 1, 2010 and February 15, 2011. Also, new to BranchInfo beginning with the last update, are a series  of key market potential and competitive metrics calculated for a one-mile radius surrounding each branch.  In order to better understand the  characteristics associated with branches that institutions have chosen to close and/or consolidated into other locations, we decided to conduct an analysis of the closed locations, comparing them to locations which have remained open. 


To conduct our analysis, we began with the 422 branches reported as having been closed between July 1, 2001 and February 15, 2011. We then identified the complete branch networks for all institutions that had reported a closed branch during that time period so that we could compare closed branches to open branches for the same institutions that had closed one or more branches.  This approach allowed us to compare the 422 closed branches to 43,439 open branches for the same institutions.

Once our database was assembled, we compared the following characteristics for the open and closed branches:

  • Age of the branch
  • MarketBank deposit potential
  • MarketBank loan potential
  • MarketBank investment potential
  • Number of competing branches
  • Average MarketBank deposit potential per branch (within a one-mile radius)
  • Branch deposit market share
  • Size of branch in deposits dollars
  • Type of institution regulator
  • Branch office versus main office
  • Service type (full service brick & mortar, etc.)
  • Each branch's share of total bank deposits
  • Bank Asset Size

Each variable was tested for statistical significance using either chi square analysis or one-way analysis of variance, with .05 being set as the alpha value (for you quantitative types).


For our study, we broke down the variables we analyzed into several categories, focusing on the physical/administrative characteristics, competitive environment, and market potential.


First looking at the physical and administrative characteristics of closed branches, we found that the age of a branch was a statistically significant when comparing open and closed branches.  Closed branches are, on average, much younger than branches that remain open.  While the average age (calculated using the "Date Established" field) of an open branch is about 36 years, the average of a closed branch is just 26 years.

Another significant difference concerns the service type of the facility.  Overall, we found that "Limited Service" facilities (such as drive-through branches, and seasonal/mobile offices) were much more likely to have been closed compared to full-service offices.

In terms of the type of institution most likely to close a branch, state savings assocations and state savings banks closed 7.9% and 5.2% of their branches, respectively, compared  to state and federal commercial banks, which closed less than 1% of their branches.

Closed branches also have a tendency to represent somewhat larger contributions to banks' overall deposit levels.  Our analysis found that although the average open branch represented approximately .5% of its institution's deposits, the average closed branch represented a considerably larger 3.2% of its institution's deposits (consistent with a smaller institution). In terms of deposits, closed branches were somewhat smaller than open branches, holding  an average of $34.6 million in deposits, compared to $60 million for open branches (excluding outliers).

Finally, the size of the institutions also seems to be significantly different when comparing open and closed branches.  Although the average institution held approximately $125 million in assets, those with closed branches were considerably smaller, holding an average of just under $40 million in assets.

Geographic Distribution

Based on the percentage of total branches closed during the second half of 2010, states with the highest percentage of closures (2% or more of the institutions' branches being closed) included Idaho, North Dakota, and Montana to the north, stretching south to Arkansas and Mississippi.

Competitive Environment

In our analysis, we studied the nature of each branch's competition by assessing the number and size (based on deposit balances) of competitor branches located within a one-mile radius.   Interestingly, the number of competitors does not prove to be significantly different between open and closed branches, however an analysis of market share does surface an interesting difference.  Although the average share of deposits for open branches was approximately 27.1%, the market share of closed branches was somewhat higher, at 30.7%, suggesting that a closed branch does not necessarily equate to an under-performing branch. 

Market Potential

One measure that we often use to determine whether an market is potentially over-banked, is the average estimated MarketBank potential deposit balances divided by the number of bank branches present.  In areas in which tend to be saturated with bank branches, we generally find that the average deposit potential per branch is typically lower than areas with unmet potential.  An assessment of the average deposit potential per branch found that closed branches tend to be in somewhat lower potential markets than open branches. The average potential per bank branch in open-branch market areas was about $18 million, which was higher than the $15 million for closed branch market areas.

We also used our MarketBank retail market potential database to quantify the consumer deposit, retail  loan, and retail investment potential indices for a one-mile radius surrounding each branch (an index value of 100 equates to the national average for balance potential per resident household).  Not surprisingly, retail deposit, loan and retail investment potential was substantially higher among still-open branches compared to closed branches.  Open branches had average deposit, loan and investment potential indices of 104.5, 101.1, and 105.9, respectively. All are significantly higher than  the deposit index of 100.5, loan index of 92.8, and investment index of 99.3 for closed branches.


 Based on these observations, we can conclude  that institutions that close branches tend to be somewhat smaller thrifts, rather than commercial banks, and the closed branches tend to be rather younger, and more likely limited service facilities, with almost half the deposits of branches that remain open.  The average market share of closed branches tends to be close to or above the average for other branches in their local markets, and the average deposit potential per competing branch tends to be somewhat below average, suggesting that the areas in which branches are closed tend to be rather smaller, as well as competitive and/or saturated markets.  Additionally, the closed-branch markets tend to be hold lower than average potential for lending and investment products, although relatively average potential for deposits.

Although closed branches tend to be smaller branches in lower potential markets, the decision to close a branch is not one that is made consistently from branch to branch or from institution to institution, suggesting that very often, the decision may not be based on market conditions as much as it may be based on logistical or contractual issues.  For example, given that limited service facilities are more often closed, it is possible that branches that have been opened as temporary facilities to serve a particular need are often closed when the need no longer exists and the branche's usefulness comes to an end.

Although this analysis gives us a start in understanding some of the underlying characteristics, a better understanding of the nature of closed bank branches should also include additional local market and locational information, such as daytime population, business mix, employment, and demographics of those residing within the markets.

Friday, May 13, 2011

Great Debate - Interop Weathermen Tell Which Way The Cloud Blows

The session on "The Great Debate - Are Clouds More Secure?" revealed two things.  This is a rather simplistic question, and the answers were completely self-serving.  Cloud providers advocated cloud security as at least as good as traditional net security; security providers, consultants and traditional IT had key reservations.  And in this Oxford style debate, the latter successfully scared the crap out of an unsure audience - 8 audience members who went in trusting the cloud were swayed to serious doubt.

A bit more quantitative was a survey of 94 IT execs at Interop, conducted by Network Instruments.  This survey revealed that:
  • 61% have cloud services running on their nets, a big jump from a year ago.
  • 50% have deployed a private cloud.
  • 21% of apps run in the cloud, and this is forecast to be 38% next year.
  • 61% say availability improved over last year; 50% said scalability has.
But perhaps the key finding is that 60% said their ability to troubleshoot worsened. It became much more difficult in the past year to show that the leak is on the cloud provider’s boat.  The ability to audit cloud performance and hold the provider accountable is critical.

The real answer to the overall question is, it depends.  The more voluminous, static and relatively insensitive the data involved is, the more the cloud makes sense.  And the more dynamic the application is, and the more important it is to deploy it quickly, the more the cloud makes sense.

Wednesday, May 11, 2011

IDC Reveals Cloud Adoption Keys At Interop 2011

If you made it to the 7:30am IDC breakfast today, you learned the two most important things in life.

Never rat on your friends, and always keep your mouth shut.

Actually, it's the fact that among 500 survey respondents, Pay As You Grow (48%) and Easy, Fast Deployment (40%) are the key drivers behind cloud adoption.

Tuesday, May 10, 2011

Vint Cerf Blasts Off Into Space

Vint Cerf stressed extending the Internet into space, and into us, in today's discussions at Interop.

Among other things, Cerf noted that "Cars, buildings, clothing will all be instrumented... "We will be instrumented." 

As for the cloud, Cerf suggested that interoperability across cloud providers was not only key, but essential, and that  "We won't get true interoperability until customers say... I won't buy it if it isn't open.'"

He also drew attention to a big Google future in analytics.

Cisco Embraces Video at Interop 2011

Want to know how to manage video on a corporate net?

Cisco's keynote presentation on Borderless Networking at Interop this morning was really all about media and fat content management, and not so much about connectivity and community.  But you can learn about it all - with video.  Today's keynote will be available on demand beginning Thursday May 12, and you can register here to access all of the Cisco Virtual content from Interop.

Can your network handle it?

Monday, May 9, 2011

Interop Forecast - Cloudy With A Strong Chance of Reign

Interop Vegas 2011 gets going for real tomorrow, with several keynotes that just might prove memorable and a conference session on just how secure the cloud really is at 2:15.

Dave Donatelli in the Enterprise Servers group at HP will kick things off at 8am with a talk about implications of cloud access for corporate nets.

Mark Templeton of Cisco follows, discussing how user expectations are driving the new paradigm, as apps transform from enterprise driven bloats to easy, cheap micro-apps.

Then, it's Old Home Week with Vint Cerf and Dan Lynch talking about how we got here and what the future Internet will look like as a network.

Later, Cisco will talk more about network convergence and the cloud.

And that's just the morning stuff.  At 1, Azure Guy Zane Adam will talk about the possibilities of a cheap, accessible public cloud.  Alex Gray of Juniper will talk about virtualization and what is bound to be the next buzzword, Fabric.  And Scott Hopkins of IBM will discuss business transformational aspects of the cloud.

But the hottest session tomorrow, in the wake of the Amazon outage - a Don't Miss - is bound to be the conference pres on whether the cloud is secure or not, following the afternoon keynotes at 2:15.

Wednesday, May 4, 2011

Apple iOS Update Offers Location Cache Fix

Apple released a 4.3.3 update to iOS today to deal with privacy concerns about the location database cache.

Now, you can actually stop it from backing up to iTunes.  And those who could not care less about Location Services can turn off the feature and dump the while thing.

The web page announcement was about as cryptic as they come, making no reference at all to the underlying issues and concerns.

Monday, May 2, 2011

Osama bin Laden Compound Mapped

After a mad scramble of geo & web developers, editors and average citizens, Google has the Osama bin Laden compound mapped and geo-referenced.

DOD adds this schema,

and some aerials, too.

If we had coordinated and scrambled this intensely before the fact, we'd have had the maps sooner.