Taipei records highest density of bank branches among world's major cities: McKinsey & Co.

Jan 18, 2005 Ι Industry In-Focus Ι Furniture Ι By Judy, CENS
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Taipei, Jan. 18, 2005 (CENS)--There were 3.4 bank branches for every 10,000 persons, higher than the corresponding figures in Hong Kong, Seoul of S. Korea, Kuala Lumpur of Malaysia, and many major cities in the United States and Europe, according to a report recently released by McKinsey & Co., a U.S.-based management & consulting firm.

The report analyzed that the optimal number of banking branches for every 10,000 people should be two. Currently, Taipei has a total of 850 banking branches, with each of them offering similar financial services.

A ranking official at McKinsey's Taipei office pointed that some areas in the city have extremely high density of banking branches. For instance, there are 33 such branches along the Section 2 of Nanking E. Rd., 27 branches around Hsinyi Rd. and Tunhua N. Rd., and 31 in the area surrounding Taipei Railroad Station. He believed that five banking branches are quite sufficient enough for any commercial area, and therefore the number of bank branches in Taipei should be cut by at least 30% to a total of 520.

Hsieh Chien-ping, vice president of Mega Financial Holding Co., noted that Taiwan's banks have in recent years actively established their service network by setting up branches around the island, particularly in large cities, but the operating cost of such branches is rising.

Hsieh said that in the future banking branches should focus on personal financial management and consulting services, as both lending and deposit services would mostly be offered via e-banking systems. Accordingly, it's necessary for domestic banks to slash banking branches, he added.

McKinsey estimated that Taiwan's domestic banks have to prepare at least US$500 million to enter the market in mainland China; and if they intend to show some influential power in the Asia-Pacific area, they should be merged into four to seven large banking conglomerates. Currently, Taiwan's top five banks together command only a 38% share of the domestic market, which is relatively too small for them to influence the markets both at home and in Asia.
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