Monday, February 16, 2015

Bank branch closures

Hardly a surprise that the proposed internal banking guidelines provide no protection for smaller communities, banks are businesses and obliged to return a profit. If a branch is not making money then it's only obvious it should be closed; the invisible hand of the free market dictates a simple logic: if people wanted a branch they would use it, if they used it then it would be profitable.

Except what dictates profit in these cases? If a customer makes a withdrawal does that count as a loss, is it how many loans and mortgages a bank sells that determines its success?

Can I be charitable and simply confidethat it's the number of transactions that a branch deals with? If so then with a decline in numbers, a branch would hardly be missed. But why would numbers decline? To listen to the banks its the advent of new technology, you can do your banking, apply for a loan etc. online. There is no longer a need to physically present oneself at a local branch, how much more convenient.

Except is this really the case or an example of false cause and effect, is the drive to online banking driven by the customer or rather by the banks themselves? Consider the operation of bank branches in the latter 20th and early 21st centuries compared to other businesses.

What time does your local branch open, what tine does it close? Chances are it opens at 9am (or even 10am) and shuts at 5pm (or even 4pm) and then only Monday to Friday. Where is your local branch? Probably in the main thoroughfare of your town or village.

Given that most employed work the same hours (although with the rise in shift work that's changing) that the banks are open and that places of employment became out of town estates, is it any wonder that the branches started to empty and that when an opportunity to bank at a time and location of your own choosing became available it was jumped on?

Does this mean that people don't want or need physical branches and points of contact? Not necessarily merely that the banks have slowly been removing them and providing no other option.

So is there an option available to maintain branches while acknowledging the main point of a bank's existence (making profit) and the addition of online services, I think the answer is yes and an example is already up and running in the form of every major airport in this country.

Unlike supermarkets and other convenience stores banks offer exactly the same non-physical goods, no requirement for any major physical storage just a desk and a computer; sound familiar.

Could banks pool funds for a 'bank terminal' and staff it 24/7 with separate kiosks? Reduced overheads, better footfall (anyone banking with a rival will get to see your offers), stops the whinging from the government (regardless of Party), and heck might even bring more customers in. Certainly better than just pulling services and shutting out or displacing customers to your rivals and certainly better than sticking your fingers in your ears and reciting "but this is what the customer wants" over and over again.