From American Banker:
Across a footprint that stretches from Maine to Florida, TD Bank is almost annoyingly good at the small things customers love.
It offers dog treats to its branch patrons’ four-legged companions. It makes sure its giveaway pens have no metal pocket clips (women don’t like them; they cause too many snags). TD also has a flair for marketing stunts like the flash mob that performed an elaborate dance routine in Times Square last year. Employees and local dancers dressed up as doctors in green scrubs, encouraging consumers to get a free “checking check-up” to learn about recent changes to their bank accounts.
Indeed, TD prides itself on the attention it pays to every detail in its interactions with the public.
What’s less obvious is how well the U.S. retail banking unit of Canada’s TD Bank Group (TD) has paid attention to the big details.
With smart calls on the macroeconomic and competitive environments, TD has grown in ways that suggest its strategy is built on something far more substantial than dog treats and dance routines. And with a conviction about the future of retail banking that veers from the more cautious path of its peers, TD-which now has more branches in the United States than in Canada-is doubling down on its investment in branches here, while many of its rivals are openly questioning the profitability of retail banking. JPMorgan Chase, for example, predicts that 70% of customers with less than $100,000 in deposits and investments will be unprofitable as a result of new regulations on bank fees.
If the U.S. retail customer makes for a business with thinning margins, count TD among the banks planning to make it up on volume. While the average bank branch conducts 11,000 transactions per month, the average TD branch conducts 17,500. And the company, which first entered the U.S. in 2004, sees ample room for its young U.S. franchise to grab market share.
This spring, at its annual shareholders meeting, TD unveiled a plan to increase its branch presence in New York City by more than 50%, with the addition of 50 locations over the next four years. Though it means pitting itself, in an already saturated market, against the likes of JPMorgan Chase and Wells Fargo, TD sees the potential to become the area’s third-largest retail bank by deposits, up from its current fifth-place standing.
TD Bank’s expansion show that intelligent growth is still alive and well in banking, for financial institutions with strong balance sheets and reasonable growth aspirations. But this does require substantial analysis and keen knowledge of the underlying markets.
For some financial institutions, the time may be right to consider expansion opportunities. As net interest income and overall profitability edge up over time, a strong case can be made for cautious expansion for some financial institutions, particularly those with a reasoned and logical approach to profitable growth.
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