News Charlie Weston

Tuesday 30 September 2014

Charlie Weston: You can take this to bank -- branches are on way out

Published 16/07/2012 | 17:00

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THEY are monuments to the power of Mammon and every town has one -- an impressive bank branch built out of granite or red brick.

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The AIB, Bank of Ireland or Ulster Bank branch is always in a prime location in the town, and it is usually one of the best buildings.

These baubles have been the commercial and architectural mainstays in every town going back long before AIB was created with the merger of Provincial Bank of Ireland, the Royal Bank of Ireland, and the Munster & Leinster Bank in 1966.

Bank of Ireland and Ulster Bank also have long traditions of having a branch in most towns.

In the past few decades, the big three have had to compete for space and customer accounts with branches of Permanent TSB, EBS, Irish Nationwide, ACC, Halifax/Bank of Scotland, National Irish Bank, First Active and KBC Bank.

Most of those banks have retrenched, but you will still find impressive AIB, Bank of Ireland, Ulster and Permanent TSB branches in most towns.

Now, many of these monuments to Mammon are about to be felled by the power of a mouse.

Computer banking is the future, global industry experts believe -- and they know that they can save huge money by encouraging customers to click online.

Banks are hoping that people in areas losing branches will take to the mouse attached to their computer.

They can also access their funds through mobile phone apps and other web-based technologies -- and, of course, ATMs (automated teller machines).

But this poses particular difficulties for rural Ireland, where an elderly population and poor internet access can mean that internet banking is not a particularly viable option at the moment.

Services will certainly suffer, and those in rural areas are likely to be the biggest losers. This is exacerbated by the fact that the smaller the population, the bigger the chance of the bank leaving town. This, in turn, will hit local businesses who piggyback on people coming into town each week to do their banking.

It is just another consequence of the collapse in banking profits, due to the ridiculous boomtime property lending that has wrecked the economy.

All of this will prompt some customers to wonder if tumbleweed blowing in the wind will soon be the only activity in smaller towns.

We don't know yet the precise locations of where the branches are closing, but you could try this test: if the banks in your town seem to be doing little business on any given day, then their number could well be up.

All of this means we are staring into one of the most radical shake-ups in branch banking we have ever seen in this country.

AND many of the branches that do remain after the cull of around 200 will no longer accept cash. Instead, some of the 640 or so branches left will become what bankers like to call "service centres", where you go for financial advice, sign up for a mortgage or buy a pension, rather than cash a cheque.

It is understood that Central Bank chiefs are keen to try and minimise at least some of the disruption to be caused by the branch closures.

To do this, they will insist that even if a town is seen as no longer able to support banking, then at least one branch will be encouraged to keep a presence in town.

This will likely mean banks alternating their closures in different towns, once competition concerns are dealt with.

Regulators will also demand that people who are not tech-savvy, such as some older people, are given help by banks to adapt to the new landscape.

Having put €64bn into recapitalising our banks, these sorts of strictures are the least that a bank-bashed population can expect.

Bankers argue that a branch network is costly and that many of the smaller, rural-based ones are loss making. These have to be subsidised by the bigger urban-based units.

And you can expect bankers to make much of post offices and their role in the future of banking.

Both AIB and National Irish Bank already have deals with An Post to use the 1,100 post offices for customers to lodge cash and cheques.

Of course, there is a massive opportunity for the country's 400-odd credit unions, currently preoccupied with the merging of weaker credit unions with larger ones.

If only more credit unions could offer their members a decent current account, with a debit card, they could clean up.

In the meantime, take your children to see a bank branch. There won't be many around when they grow up.

Irish Independent

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