Location Analysis in Banking: A New Methodology and Application For a Turkish Bank

Abstract

In recent years, technology has improved and distribution channels such as credit cards, telephone-internet banking, Automated Teller Machines (ATMs) etc. have become alternative opportunities for reaching services of banks. However, banks generally gain new customers and develop customers’ loyalty at their branches. Since branches are the indispensable contact points between the banks and their customers, no bank can easily avoid opening new branches or reorganizing the locations of current ones. According to the current statistics of The Banks Association of Turkey, the number of total bank branches has increased by 5.35 % from 10,450 to 11,009 in the last year. According to the statistics of Retail Banker International, JPMorgan & Chase opened 89 new branches in June 2013, which increased number of its branches from 5,608 to 5,697. In the same period, BB&T increased the number of its branches from 1,775 to 1,851 (Retail Banker International 2013). This shows that, due to the effects of increase in total population, population per bank branch and individual earnings, banks try to increase the number of their branches by locating them in the right places. Therefore, the branch location problem is a fundamental topic for banks in reaching their strategic goals.