tsb: Bank branch closures will leave millions out on a limb | Personal Finance | Finance


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RBS’ closure of 162 branches will destroy almost 800 jobs

Last week it was challenger bank TSB causing chaos and uncertainty with an IT meltdown, now bailed-out bank Royal Bank of Scotland is spreading misery by announcing it will close another 162 branches throughout England and Wales. 

The move will also destroy almost 800 jobs and suck yet more life out of our ailing high streets. 

Since 1989, the number of branches has fallen by more than half, with 762 closed last year alone, leaving 1,500 communities with no bank at all, as services shift online. 

RBS is not the only villain: Barclays, Lloyds and HSBC have also been hacking away at their networks, as have many building societies, with Yorkshire shutting 48 branches in 2017. 

Which? money expert Gareth Shaw said branches are disappearing at an alarming pace, with almost 2,000 gone since 2015: “Changes to the funding of free-to-use ATMs also threaten cash machines with closure. Consumers must have assurances they can continue to access the cash and services they need.” 

Mike Cherry, national chairman of the Federation of Small Businesses, said the trend is bad for everyone: “When a bank branch goes it means less footfall, less cash in the local economy and less revenue for local small firms.” 

RBS closures are particularly infuriating because the bank has just posted a 70 per cent rise in profit before tax to £1.2billion for the first quarter, on income of £3.3billion. 

Worse, it is still 71 per cent owned by the taxpayer. 

Cherry added. “It is disappointing to see the majority taxpayer-owned bank continuing to reduce in-person support, which will particularly affect vulnerable consumers.” 

When banks shut local branches they are supposed to offer alternative services, but David Clarke, head of policy and advocacy at campaign group Positive Money, said RBS has a poor track record: “Of the 51 closures the bank announced in 2016, it did not even plan to leave behind an ATM at 41 of them.” 

Banks defend their actions by pointing out that fewer people are using their physical networks, with RBS saying branch transactions are down 30 per cent since 2014 while mobile transactions have jumped 75 per cent.

However, Clarke said that millions have never banked online and further closures will worsen financial exclusion. 

He called on the Government to use its majority stake in RBS to protect access to face-to-face banking.

Age UK charity director Caroline Abrahams said closures are particularly concerning for many older customers, financially stranding those who are offline or live in rural areas. 

These problems are worsened by poor local transport, substandard internet services and mobile phone black spots. 

“Older people have a right to be able to carry out essential banking in an accessible and secure way,” she added.

Georgie Frost, consumer advocate at GoCompare.com, said many mistrust banking technology following the fiasco at TSB, which locked millions out of their online and mobile banking accounts: “This shows how vulnerable we are, should technology fail.” 

It is a myth that customers have given up on branches, according to the Nottingham Building Society, which has bucked the trend by doubling its branch network to 67 in the last six years. 

It reports a 10 per cent rise in branch footfall after reinventing its network to offer saving products, fully independent whole-of-market advice on mortgages and financial planning, and estate agency services. 

The society’s research shows that two thirds of people think branches have a key role to play, while almost a third would be at risk of financial exclusion if their bank or building society branch closed. 

Chief executive David Marlow said the industry needs to do more: “It should start by looking at the services offered and making sure they are more relevant.” 

Metro Bank is growing rapidly after also putting its faith in branch access and customer service, and aims to have 200 “stores” across the UK by 2020, open seven days a week. 

Laith Khalaf, senior analyst at financial planners Hargreaves Lansdown, said blame the banks all you like, but smartphones are the ultimate villain of the piece: “Banks have to respond to changing customer behaviour and millions are switching onto mobile banking.” 

Banks do not have the luxury of maintaining an unproductive branch network, as they are under pressure to reduce costs. 

“This particularly applies to RBS, which expanded too fast before the financial crisis,” Khalaf added. 

“Those who have not joined the digital revolution are now gradually running out of options.” 

The trend looks unstoppable with fewer than 10,000 branches remaining. Investment bank UBS predicts half of these could close in the next few years. 

In 2016, the Campaign for Community Banking Services gave up the struggle to prevent closures, with founder Derek French saying he did not want to mislead people into thinking that the tide of closures could be stemmed.

The banks have decided that profits come before branch access, leaving millions out on a limb.



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