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

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.