Have you heard? Hundreds of bank branches will be closing across the UK! Why? What impact will this have? Cashfloat.co.uk, a short term loan company in the UK, explores.
A new round of bank branch closures appears to be taking place on the UK customers of the four big banks. These closures will leave thousands of customers without easy access to a local bank and even though the government has applied pressure for banks to look at what impact a branch closure could have on a community, all of the leading banks are planning to close some branches in 2016. As of now, 600 branches have been closed over the past year alone.
HSBC has the largest list of branch closures intended with 200 set to be removed later in the year. The represents one-fifth of the bank’s branches in the UK and is one-third more than were closed in 2015.
The Royal Bank of Scotland plans to close 100 branches as does Barclays Bank, and Lloyds Banking Group will close 21 branches.
As well as removing well known and trusted bank branches from the ever decreasing services in the High Streets of the UK, the closures will impact on both individuals and local businesses. In particular, the elderly who do not have access to the Internet, or who are not comfortable with the anonymity of telephone banking, will suffer the most.
All of the leading UK banks have seen a decline in the number of customers coming through their branch doors as personal visits diminish in favour of the Internet or telephone banking, and this is the reasoning behind the closures.Measures Put In Place to Help Customers
Some of the banks that are going to be reducing the number of branches have put measures in place to mitigate the effect on customers. HSBC has engaged with the Post Office so that its customers can still access some banking services. Barclays has formed a partnership with ASDA so that a mini branch can be available to their customers. However, it is clear that these attempts to alleviate customer concerns are not adequate when real people want real banking services to be readily available.
Critics of the planned bank branches closures have pointed out that it is the elderly and most vulnerable people who will be most impacted by the loss of branches. Low-income families may have limited or even no access to the Internet and these, along with the elderly are the ones who will suffer the most from the loss of banking services. If they are unable to withdraw money for an urgent expense, they may opt for a payday loan until they can next get to the bank, costing them plenty in interest.
At the end of the year 2014, there were 25 bank branches for every 100,000 customers in the UK, and this is below the amount in France and Spain but above those of the Scandinavian countries. An estimation predicts that around half of the remaining branches will be closed in the next five years as more people use online systems or the phone for everyday banking.
Banks in the UK have seen a substantial reduction in footfall and this, along with the desire for better profits, has led to the closures.
An estimation says that Royal Bank of Scotland will cut up to 600 jobs by branch closures. These are mainly clerical roles with 200 jobs going in London and 400 elsewhere in the UK. In spite of the bank union’s attempts to fight the closures, the indications are that these losses will go ahead.
Union representatives have called for a stop to the closures which it says will hurt customers as well as banking staff. Also, the threat to the local communities goes hand in hand with an undermining of the future of the bank which is still partially owned by the taxpayer.
However, eight years of successive losses have possibly forced this move as the chief executive tries to get the bank back into profit.
In addition to the closure of branches, there are plans to reduce the opening hours at some bank branches. The bank, which includes Nat West branches as well as Royal Bank of Scotland, is seeking to minimize the impact of branch closures and is trying to ensure that where possible staff can be redeployed and not made redundant.
Despite a promise made some time ago that the RBS would never close the last branch in a town, there are at least 14 branches that are closing which will leave some communities with no bank at all. Towns with low footfall branches that do remain open may see bank services on only one or two days per week.
The boss of Barclays Bank has also warned that there could be a reduction of 50% in the number of bank branches in the High Streets of the UK within the next ten years. If this proves to be an accurate prediction, then bank staff at Barclays will see the loss of between 20,000 and 60,000 jobs in this period.
In a similar cost-cutting exercise, Lloyds Banking Group is set to sack 625 staff and move the jobs to India. Union members have said that the cuts will affect several sections of the banks including commercial banking, consumer finance, and head offices that are based in Wolverhampton, Halifax, and Brighton.Restructuring Means a Loss Of Jobs At Lloyds
In addition to the announced closure of 21 branches, Lloyds is undergoing a severe restructuring exercise that will involve a total 9,000 job losses, announced in 2014. The outsourcing of IT jobs will go to India with around 80 roles going from a range of offices.
What this means is that Lloyds will effectively be paying less in wages for the same roles, and this impacts on both customers and the staff who are to lose their jobs. In addition to the job losses there is also a stop on recruitment which again leads to more work for fewer people, and as the restructuring goes on, staff will be forced to apply again for their own jobs. The announced restructure stated that 200 branches will close with 21 of them going in 2016.
The revolution in digital technology has been responsible for a massive sea change in the way that banks operate both in the UK and worldwide. And, it does look like there are more changes to come in the next ten years which will probably be more than those experienced in the last 200 years.
The impact of the digital revolution has reduced the number of bank staff, reduced the numbers of customers at branches and has enabled a lot of people to do all of their simple transactions using a laptop or smartphone.
Bank branches that have used the same kind of customer service systems have also seen massive changes, and now customers no longer have to queue to see a cashier but can pay in and withdraw sums of money and cheques at assisted service counters. Staff who used to be behind a counter now greet customers and direct them to the said machine and offer help if necessary. Banks must employ all the new technology or get left behind by the challenger banks which are rapidly emerging.
In spite of all the new technology, research has shown that there is still a demand for bank branches and to be fair to the banks it is not their fault that some 90% of simple bank transactions are now taking place online. Banks such as Barclays and HSBC have partnered up with other businesses to try to alleviate the problem of branch closures. However, a better solution is necessary as most customers will want to see an advisor in person at some point.
The possibility of shared branches between two banks has been raised, but it does not look likely that the rival banks will want to go down that route. In spite of the accelerating changes that are going down in the UK, a survey has pronounced that 70% of customers would still like access to a local branch.
Customer service at these important businesses needs to be addressed even if it leads to two competitors occupying the same space. Maybe if the customer starts demanding the retention of this kind of service the leading banks in the UK will finally get the message.