Proctor Wong, a real estate expert specializing in bank branching in New York, has never been busier.
"I've been working 15-hour days just trying to keep up with the volume of branch openings," said Mr. Wong, a senior managing director of the bank services group for Newmark New Spectrum Retail LLC, which recently hired more people to keep up with demand.
The business windfall has been sparked by an industrywide embracing of retail banking in response to paltry revenues from most other business lines. That effort has manifested itself most notably in ambitious branch expansions.
From giants like Bank of America Corp. and Washington Mutual Inc. to smaller companies such as GreenPoint Financial Corp. of New York and Commerce Bancorp Inc. of Cherry Hill, N.J., financial institutions throughout the country are opening branches.
Yet some industry observers are questioning the collective commitment to the retail business - as well as the strategy's overall effectiveness.
What will happen, some ask, when the business winds change and the revenues start coming from commercial lending, capital markets, and investment banking?
"My fear is that the current attention to growing and improving the branch networks will be temporary and partial" and will be undercut as other businesses improve, said Peter Carroll, a managing director at Mercer Oliver Wyman, a New York consulting firm.
For now the branch trend is widespread. According to Mr. Wong, until two years ago the majority of Newmark New Spectrum's work focused on branch divestitures. Today he spends 98% of his time on expansion efforts.
But retail banking involves more than simply opening branches, and experts say that if banks are not fully committed to the retail strategy, or are not bringing a clear identity and advantage to consumers, they will get disappointing results.
James McCormick, the president of First Manhattan Consulting Group, said the sheer ubiquity of the strategy implies that not all entrants will succeed.
He noted that when First Manhattan surveyed the chief executive officers of 40 banks six months ago, 90% explicitly mentioned an initiative to expand their retail banking operations.
"I believe that on the order of 60% of the new branches are uneconomic in terms of return on investment and will be dilutive to earnings for more than three years," Mr. McCormick said. "Successes will be concentrated among a handful of larger banks that really know what they're doing and a large number of smaller banks."
The situation would be most dangerous for a large bank with an unfocused value proposition or no real calling card, he said. "What those banks are finding is that just opening branches is not good enough. That's a formula for losing share."
Vernon Hill, the president and CEO of Commerce, who argued that it would be one of the winners in the branch-building game, said that it has been a longtime believer in the strategy.
Commerce has been "the lone voice" out there for a long time - and for most of that time "people thought that we were nuts," he said.
According to Mr. Hill, simply building a branch system is not enough. Banks need a proven, "value-added" business model to entice customers. "Otherwise, it's just another bank branch. It's taken us a long time to build this model and build our brand. Talk is cheap. Just saying you're going to do is a long way from getting it done, day after day."
Other bankers contacted for this article said that nothing will deter them from their retail strategies. Most called their checking account the key entry point, from which they can sell myriad products.
"Whatever products people choose for their money, they will still need a banking center for even the most basics of their requests," said Ashley Adams, a spokeswoman for Bank of America, which this year said it would open 550 branches over the next three years.
After a period of consolidation in which its branch total fell from 1,810 in 2000 to 1,725 at the end of last year, Bank One Corp., which currently has 1,803, is expanding again.
"We think each one of our businesses can grow at the same time," said Tom Kelly, a spokesman for the Chicago company.
