SMEs fear banks can't meet need to move accounts

Multiple business sources, including farmers, are reporting that accessing banking services from account opening to customer support is increasingly difficult, with AIB, Bank of Ireland and Permanent TSB struggling to absorb hundreds of thousands of new customers.

The problem was recognised at the highest levels of the Central Bank two months ago, with deputy governor Derville Rowland reporting to the Commission that there were “bandwidth contention issues within the retail banks due to the various structural changes in the sector”.

A spokesperson said Ms Rowland’s comments referred to the “entire landscape of switching activity”, including business banking customers, who are being impacted alongside consumers.

With fewer than half of current account holders having switched banks to date, according to data from the Competition and Consumer Protection Commission (CCPC), there is no let-up in the pressure on the system, suggesting that some customers could be left unbanked.

The bottlenecks are causing problems for key customer constituencies, with the Irish Farmers’ Association saying that banks were adding to “uncertainty and worry among farmers” at a time of high inflation and eroding margins.

“It’s hardly surprising that sentiment towards the banks is so negative among farmers, when you consider the Ulster Bank exit and the level of branch closures/withdrawal of services throughout rural Ireland,” said IFA farm business national chair Rose Mary McDonagh, adding that AIB’s decision to withdraw cash services from 40pc of its branches was another blow.

“It’s a far cry from what it was in the past.”

She said a recent Irish Banking Culture Board survey that found existing services for farmer fell well below expectations was “particularly bleak”.

The amount of switching activity has caused a capacity crisis in the sector, with customer queries going unanswered and businesses left waiting to open accounts they need for payments and wages. The banks have been forced to throw more resources at the problem, hiring more staff at a time they are also trying to cut costs.

AIB has pledged to recruit 700 temporary staff to deal with the backlog and is internally redeploying 300 workers to account opening.

Bank of Ireland has increased staff numbers for account opening by 400 and will add another 275 to deal with the surge in applications.