Gamble is all stick and no carrot for customers
WITH National Irish Bank's branches disappearing faster than murder victims in an episode of Danish thriller 'The Killing', customers, employees and rivals are asking whether Danske Bank really wants to remain in Ireland.
The answer appears to be a qualified 'yes'. The bank's commercial and business divisions are doing well and management is happy with their progress.
The decision back in May to hive off the bank's mountain of bad debts into a separate unit also seems to be paying dividends and removes a distraction even if the problem remains for the bank's leadership in Denmark.
This leaves the most visible division, retail banking, as something of an outlier. To slash the number of branches from 45 to nine in the space of two years shows that top management clearly see little future for bricks and mortar but it does not necessarily follow that Danske plans to pull out of the retail banking entirely.
The bank says it is betting that Irish people are about to belatedly embrace the tech revolution. NIB is very proud of its award-winning app for the iPhone and other gimmicks that make internet banking easier.
Senior management even hope that we may ignore computers entirely and jump straight from branch banking to mobile-phone banking.
That would allow us to catch-up with the Danes and others who hardly enter a bank from one end of the year to the other.
Irish people have been early adopters of many technologies such as electronic tolling but we have had little experience of hi-tech banking.
The reasons for this are not clear. NIB's critics believe that we have some sort of unusual love of cash and cheques that can never be broken. Another answer might be that no Irish bank has yet offered customers a real choice.
Perhaps we use cash and cheques because it is still close to impossible to conduct simple operations such as money transfers within the European Union on the internet. The problem with NIB's offering is that it is all stick and no carrot. Customers must still pay quarterly fees while banking with NIB despite the drawbacks associated with having just five branches outside Dublin and long queues at post offices to collect cash.
The evidence shows that people will embrace technology when it makes their lives easier. Nobody had a problem with ATM machines once it became clear that one could get money out of hours.
The advantages of NIB's internet strategy are clear for management who are intent on cutting costs but in the absence of cheaper banking, the advantages for customers are still far from evident.