Where have all the banks gone?

Bank branches once played a central part in many local communities, but each successive year after the financial crisis has seen more and more of their doors close as banks attempt to cut costs.

In fact, in only the last two years alone, more than a 1,000 bank branches have closed, with HSBC and RBS shuttering the greatest number of branches.

An analysis by the Office for National Statistics (ONS) found that it is poorer people who suffer most from bank closures – 90 per cent of bank closures in the last year have happened in areas where income is below the national average.

And one study by Nottingham University found that when bank branches close, predatory financial institutions such as pay day lenders come in to take their place, doubly hitting lower-income, often vulnerable people.

Although it’s been mostly the major banks which have slashed their network of branches – leaving many towns in the UK with not one branch in the entire community – smaller banks are closing their doors, too.

Just yesterday (January 18), Clydesdale and Yorkshire Bank (CYB) announced it would close 79 of its branches – which amounts to a full third of its network – resulting in the loss of over 400 jobs.

‘Devastating’

Unite national officer for finance Rob MacGregor called the news ‘devastating’.

“Unite is clear that the closure of a third of the bank’s branches will not only be concerning for staff but the local communities which will see their bank branch close,” he said. “This cost cutting plan leaves customers with less choice for local banking.

Now, Unite is calling on the bank to give a commitment to mitigate compulsory redundancies where possible and that they will reconsider closing any bank branches that are the last bank in a town, MacGregor noted.

On the same day (January 18), the historic Airdrie Savings Bank – the last independent savings bank in the UK – announced it would close altogether.

Unite regional officer Wendy Dunsmore explained that the bank was struggling to meet the extra costs of increased regulation following the financial crash instigated by the big banks.

“Airdrie Savings Bank has become yet another innocent victim of casino bankers,” she argued.

Dunsmore said that even at this late stage Unite is calling on Scottish and UK governments and the banking regulators to work with us to explore all options for saving jobs.

“One of Unite’s first steps will be to talk to the Scottish government’s financial services taskforce which was set up during the banking crash to help redundant workers back into employment,” she said.

Unite Scottish secretary Pat Rafferty highlighted that since 2008, Scotland has lost 19,000 jobs in finance and insurance.

‘Catastrophe’

“That is a catastrophe,” he said. “The Scottish and UK governments need to help us support employment in the banking sector, and urgently look at ways to make sure that communities across Scotland have access to local banking.”

Airdrie Savings Bank, whose focus is on customer service and savings, came to renewed prominence after the financial crash, when big banks in Scotland such as Halifax and RBS had to be bailed out by the taxpayer.

Despite a surge in customers then, the Airdrie Savings Bank struggled over the years because more and more people moved away from banking at branches and the investment costs of secure internet and mobile banking for the bank were too high.

But to say that more people are banking online does not mean that the need for bank branches is going away anytime soon – far from it.

A new report by Which? found in a survey that although 56 per cent of people used online banking last year, an astounding 44 per cent – which accounts for some 20m people – still did not use it, with many citing a poor broadband connection as a primary reason.

And another survey by Accenture also found that the number of people using bank branches is actually going up, not down, with 53 per cent of those surveyed saying they visited their bank branch at least once a month this year, up from 47 per cent in 2010.

Surprising

Perhaps most surprisingly of all, people aged 18 to 21, dubbed ‘Generation Z’ are using bank branches more than any other age group, with one in four using their branch at least once a week.

While the number of people using bank branches to make deposits and withdrawals has been falling, the Accenture research found that there’s been a significant rise in customers visiting their local branch for financial advice.

Unite national youth co-ordinator Anthony Curley told UNITElive that while on the surface the fact that young people are visiting bank branches more often their older counterparts may seem startling, he points to the economic conditions that so many young people now find themselves in.

“Young people are buried under ever-increasing mountains of debt and skyrocketing rent increases, while entering the job market in a climate where often their only options are zero-hours contracts, agency work and jobs that barely pay the minimum wage,” he explained.

“To add insult to injury, from last year those under 25 aren’t even eligible for the higher minimum wage, which is already a paltry sum – a shocking example of unequal pay for equal work that’s now enshrined in law.”

“Against this background, it is no wonder that more and more young people are going to their local bank branches, specifically to seek financial advice,” Curley argued.

“Banks always rattle on about corporate social responsibility – about supporting local communities. “If they really want to make good on these claims, they should reverse bank branch closures and reach out to those customers who need them most – the vulnerable, the elderly, those living in rural communities and not least young people, who’ve inherited a world of financial crisis and austerity.”

Accenture managing director Peter Kirk said that the “demand for branches seems set to continue.”

“Banks need to recognise that for many consumers including the younger generation, the shift towards computer-generated services cannot be at the expense of access to human service at their local bank,” he said.

MacGregor agreed.

“None of the [new banking] technology replaces the experience or skill that bank staff hold,” he said. “No app or website can provide some of the most vulnerable and socially excluded in our society with the face to face financial assistance they need.

“So as our banks rush to exit their local communities, they leave behind thousands of loyal customers and local businesses, who simply don’t recognise the stories of low ‘footfalls’ across the banking sector.”