It’s December and I haven’t been in a branch of my bank so far this year. I don’t think I went last year either. If my bank shut half its branches, I don’t think I or many of its other customers would even notice.
How should we approach stories about banks closing their branches? Rush to the barricades and demand they are kept open? Or sigh and accept that some of these high-rent locations barely see a customer for hours, and are going the same way as the telephone box?
TSB this week said it would close another 86 branches next year. RBS Group (including NatWest) has closed 1,085 of its branches since 2015, and now has just 846 left. HSBC is down to 624 from 1,066 four years ago. In total, a third of all bank branches have disappeared in a remarkably short space of time. The former head of Barclays said last year he expected another half of all branches to close in the next five to 10 years. Judged by the pace of closures recently, it will probably be sooner than that.
It’s a personal disaster for those working in the branches. Tens of thousands of jobs have been lost in banking since the financial crash, and frontline branch staff have been hit hardest.
After every branch closure announcement, there’s a PR routine. Unions express their outrage at job losses. The bank says it is only closing as a last resort, conditions are “challenging”, but customers can always use the Post Office instead. Consumer groups issue statements expressing their horror at the closures, and anger over how older customers are being abandoned. Rinse and repeat a month later when the next bank makes the same announcement.
There are lots of banks that never go through this routine. Monzo and Starling don’t. Their now very large customer bases – and they are not all 20-something millennials – don’t use their branches (they don’t have any) and they somehow get by. And we forget very quickly: all 164 branches of the Cheltenham & Gloucester were shut in 2009. No one mourns them today.
Which? is fond of research that says that “two-thirds of people would find life difficult without convenient access to a branch”. Really?
In my south London suburb there were five branches when I moved there. Now there are zero. During the same period the area has economically boomed. Some people are undoubtedly inconvenienced when a branch closes, especially if they are a business with heavy dealings in cash. But today, few are.
I had dinner with the boss of one of the major banks last week. They were being contrite about recent closures, as banks tend to be towards the press. Why don’t you just close the lot, I ventured, trying to tease out what they really think. They perked up rather a lot – yes, they said, many branches are empty these days, now that smartphones are the main way they serve customers. And the explosion in contactless payments has meant demand for cash handling services has collapsed.
In truth, the banks see a future where their branches serve first-time buyers, for face-to-face mortgage interviews, and small businesses, for loans and financial guidance. There’s every reason for these services to be provided in business parks, with easy parking. And in the meantime they will maintain a high street presence – albeit one that receives little investment – to serve a dwindling number of older customers who are unable or unwilling to use app-based banking.
It’s a mess. Older customers will be left with grubby branches, often not even that close by. All the banks will be trying to avoid being the last one standing, meaning some may close even before they really have to. Would it really be that awful for banks to collude (not currently allowed by competition rules) together and with the Post Office to provide one focal, well-appointed, location for customers? Airports do it with car hire desks. Shopping centres do it with food courts.
But it won’t happen. The unhappy dance will continue, with one set of customers deeply frustrated and others oblivious, until most branches are gone.
If you want to keep your local bank branch, the answer’s simple: use it. But very few people will.
„Though Libra has met with fierce resistance from central banks and supervisory authorities and might never see the light of day, in many other cases tech firms (both start-ups and established big players) have successfully captured bits and pieces of universal banks’ traditional value chain. This trend may only intensify in the coming years. In this environment, European banks remain squeezed.”