I respectfully disagree - or at least another perspective: The core earnings of a retail banking operation is net interest margin - essentially the spread betw

I respectfully disagree - or at least another perspective: The core earnings of a retail banking operation is net interest margin - essentially the spread between what the bank pays depositors and is paid on loans. That spread has been in a pretty negative downtrend http://research.stlouisfed.org/fred2/series/USNIM/ http://research.stlouisfed.org/fred2/series/USNIM/. However, that is for all banks (think BofA as well as you local 1st national whatever), so my guess it may look worse for purely retail operations (maybe not). My point is this, most figure it costs ~100-150bps to manage a retail branch network (which is a relatively fixed cost) and for the most part (with the past couple of years being the exception) you're getting squeezed in the interest rate side of things (not to mention what you're reserving for defaults). So of course if you are managing one of these banks you are going to want to diversify your revenue stream towards fees. So why not move to the online only banking model and scrap the branch network? Because retail branch deposits are sticky and are good at gathering stable deposits. That's a much longer discussion - but while some of this may seem idiotic from the outside there is a method (or least logic) to the madness...