In the face of a hyper-competitive retail banking market, Toronto-Dominion Bank will start opening on Sundays at more than 300 branches across the country.

Some of the other big banks, such as Canadian Imperial Bank of Commerce, already offer seven-days-a-week service, but TD is the first to do so on a large scale, a move it clearly hopes will translate into a stronger bottom line.

“Our experience is that when we are open in ways that are more convenient for our customers it does translate into additional business for us,” said Kerry Peacock, executive vice-president of branch banking at TD Canada Trust.

TD has 1,100 branches in this country, many of which also open on Saturday.

In recent months, all banks have increasely focused on their domestic lending operations, the source of the lion’s share of profit as other traditional drivers such as investment banking and international businesses started to sputter. But even there conditions are getting tougher due to a difficult economy and increased competition.

As the second-biggest player in retail banking, TD already has a strong reputation for its service culture, boasting longer hours than any of its peers. Many TD branches are already open on Saturdays and analysts said it was almost a given that it would extend services to Sundays.

“TD’s whole mantra is service, and it’s just trying to differentiate itself from its competitors by opening whenever its customers need it to be open,” said John Aiken, an analyst at Barclays Capital.

The reliance on bricks-and-mortar branches may seem to run counter to the trend toward more cost-effective Internet and telephone banking that defined the industry earlier in the decade. In recent years, however, things have turned around as banks learned to squeeze more value from their branches, analysts said.

Today, Canadians do most routine banking electronically, whether by bank machine or Internet, but still visit branches for more complex transactions such as negotiating mortgages or a lines of credit.

For their part, lenders welcome this transition for two reasons: First, the kinds of services that customers negotiate in branches also tend to offer fatter margins so the bank easily covers its costs.

Second, having the customer come into the bank provides opportunities to sell even more high-margin products.

“Once you’re in the branch, they can talk to you about other products like mortgage insurance, home equity loans and that sort of thing,” Mr. Aiken said. “And if you want to buy mutual funds, they can send you over to a financial planner in one of those cubicles and you can have a discussion about that.”

CIBC first started offering Sunday banking back in 2007 at a handful of branches in Toronto and Vancouver, and it has now expanded to 48 branches across Ontario and British Columbia. In addition, 40% of its branches are open on Saturdays.

“We will continue to review additional opportunities to expand branch hours in response to client needs,” said Rob McLeod, a spokesman for the bank.

Analysts predict other banks will follow suit with Sunday services but they said it will likely be a gradual process as players face a major challenge in making it cost effective.

Financial Post

jgreenwood@nationalpost.com