Fintech makes the world go around

Dec 12 2017   10:07AM GMT

Banks are pushing everyone to digital channels through branch network death by a thousand cuts

KarlFl40 Profile: KarlFl40

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Banks are scaling down their branch networks at an increased pace.

Banks have put a lot of money behind fintech and to retain branches would appear a contradiction.

But as branch closures continue there will be a tipping point for all customers in that when the nearest branch is too far away they will try out digital channels and quickly become converts. But when does it become more effort to travel to a branch compared to signing up to a mobile banking app, for example? Perhaps if the branch is beyond walking distance.

Earlier this month RBS Group announced the closure of 62 RBS branches and 197 at NatWest. Then at around the same time Lloyds announced 49 closures . Combined about 800 jobs have gone.

Most high street banks have been closing branches for years, since the financial turmoil in 2008 it has been a way to cut costs. But today banks do actually have a point when they say that changing customer habits and the move to mobile and online banking is reducing the need for branches.

The reason I blog about this today is that the local Santander branch where I live is closing down. What makes this interesting is that this is a high street in London. If footfall has reduced enough to justify closing a branch on a busy high street then digital channels must be the chosen method of banking for people in my area at least. Not surprising as London is often vaunted as the capital of digital banking with more people regularly using mobile banking apps and things like contactless payments. Despite there being lots of people walking past the branch few are going in. It is now easier for them to use digital channels.

So Santander said: “We constantly review our branch network to take into account changing customer behaviours and the need to operate an efficient and cost effective branch network. Our review has shown that 70% of customers who use our [this] branch, either at the counter or the cash machines, are also using alternative Santander branches. In addition, 54% of customers also manage their money through online, mobile or telephone banking.” Another coffee shop on its way.

This is not my bank and although my bank has a branch on the local high street I think I have only been in about six times in ten years. Each time to pay a cheque in. I rarely get cheques these days or pay them and if I did I can now put it into my account via the mobile anyway. If I want mortgage advice from a human I can do it over the phone or even via a video conference if I prefer seeing the person that is advising me.

But what about rural areas? Banks have an excuse for closing branches in urban areas because people prefer digital channels. People in these rural areas are less likely to use digital channels according to multiple reports, yet branches have been cut in rural areas for years. Isn’t the answer to the problem giving more support to people in rural areas to get them using digital channels. This might include reducing the reliance on cash in some areas, improving connectivity and providing people with training and computer equipment. Banks should probably offer people smartphones for free as part of their signing up package.

People use gas, water and electricity everyday but never visit the branches of the suppliers. Why should money be any different? You can do everything digitally these days, and cash machine s are there if you need cash.

Branches are still important to some people. But there will be a tipping point when the distance to travel to your nearest branch will be far enough away to push customers to more modern channels. Until this tipping point is reached some banks which have large branch networks are using them to provide showcases of digital services

I am interested to hear from people that still regularly use branches or believe they would be okay without one. When was the last time you used your bank branch and what did you use it for?

2  Comments on this Post

 
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  • Max7Headroom
    The only need for branches now is to pay in hard cold cash. The Post Office is an excellent alternative for many and still has local rural branches where banks are pulling out. Plus I have an old £1 coin I need to change.
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  • KarlFl40
    Yes I must admit I can't remember the last time I was in a branch. Thanks for your comment. Karl
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