What is Off-Premise Banking?

Off-premise banking refers to regular banking transactions that happen outside of a physical bank, typically at automated teller machines (ATMs).

How Does Off-Premise Banking Work?

For example, let's assume that Bank XYZ is headquartered in Denver, Colorado. It operates 50 branches in stand-alone buildings that offer tellers, bankers, and customer service representatives, as well as a variety of banking services (e.g., deposit transactions, loan processing, currency exchange, etc.)

Bank XYZ also operates a network of 150 ATMs in Colorado. These ATMs are in grocery stores, movie theaters, and other locations. They are not manned by any personnel. These ATMs constitute off-premise banking for Bank XYZ.

Why Does Off-Premise Banking Matter?

Setting up off-premise banking systems requires a lot of up-front capital, typically including leasing space, obtaining and shipping heavy equipment, and maintaining the equipment. Security is also an issue.

However, off-premise banking also tends to have high profit margins because it delivers convenience and speed to customers, which means that over time, banks can benefit tremendously from the fees generated from it.