The penny drops: how rural uprising forced AIB bosses to scrap plans to make 70 branches go cashless

The plan, which involved extensive discussions with An Post to relocate services to the post office, was spearheaded by the bank’s managing director of retail banking Jim O’Keeffe, and eventually signed-off by AIB’s chief executive Colin Hunt.

It was approved at AIB’s June board meeting, chaired by non-executive director Jim Pettigrew. As the major shareholder in the bank, Finance Minister Paschal Donohoe is represented on the board by Ann O’Brien, an accountant with 30 years’ experience in the financial services industry.

In the month before the plan to go cashless and launch “AIB at An Post” was made public, details were also conveyed to officials of both the Department of Finance and the Central Bank.

If they had reservations, they did not appear to express them.

At 10.15am on Tuesday, the decision that effectively made over half of AIB’s dwindling 170 bank branch network “cashless” by this October was announced to the media: “AIB announces €40 million investment programme, deepens relationship with An Post.”

But it was the second item of “good news” that was to set to unleash a nationwide controversy in the following 48 hours: “Repurposes 70 branches to boost account-opening for new customers, while withdrawing cash and cheque services in these branches due to declining demand.”

Micheál Martin was in Japan on an official visit, most ministers and TDs were on their holidays or in their constituencies and Seán Fleming, Minister of State at the Department of Finance, would later claim on radio the Government was “blindsided” by the announcement.

But it was only “blindsided” because the details of the decision had not been passed up the line before the announcement was made.

Within hours alarm bells were beginning to go off, especially beyond the lofty office blocks of central Dublin, where the bottom-line and shareholder value appeared to trump customer service in many areas of life.

Aontú leader Peadar Tóibín was outraged and by 2.51pm had issued a statement accusing AIB of ignoring “its collective responsibility to its customers” adding: “AIB has shown complete disregard for the Irish people by removing cash services in 70 branches.”

At 3.28pm Sinn Féin’s Pearse Doherty said the decision was “short-sighted”. “This will effectively remove all access to cash, cheque, foreign exchange and ATM services from the branches in question,” he said.

Independent Mattie McGrath, representing rural independents, weighed in at 8.20pm to state it was “deplorable” that Mr Donohoe and the Government were “completely silent” on the issue.

AIB’s hopes of slipping the bad news through as part of its new relationship with An Post was beginning to unravel.

By Wednesday morning, the newspapers had reported AIB’s unilateral decision to end cash services in banks in towns such as Wicklow, Edenderry, Birr, Adare, Castleisland, New Ross and elsewhere. Business and interest groups as well as ordinary customers were reacting angrily.

As the alarm bells began to ring in AIB’s trendy new headquarters in Molesworth Street in the centre of Dublin, with its painting by Sean Scully and a swirling wood sculpture by Joseph Walsh adorning the atrium, the rural political revolt was in full swing.

At 1pm, in time for the radio news, politically astute Fianna Fáil senator Timmy Dooley described the decision as “cowardly” before adding: “AIB purports to back brave but it’s clear from this decision all they’re backing is their own profit margins.”

By now the statements were coming thick and fast. Fine Gael deputy chief whip Brendan Griffin suggested at 5.16pm on Wednesday that the cap of €500,000 a year on top bankers’ salaries should be cut and the banks penalised.

This could best be done, he said, by the Finance Minister considering a “stiff banking levy” on the profits of banks which withdraw services vital to the needs of the rural economy.

By now reporters travelling with the Taoiseach were getting wind of what was happening back home and clamouring for the Taoiseach to make a comment on what was becoming a burning issue in rural areas. Within hours he delivered the coup de grace in time for Thursday’s newspapers and the early-morning radio talk shows.

“There is a significant cohort of people who need this (cash) facility and I believe AIB and the banks should take notice of this,” Martin said, giving notice he would be seeking a meeting with the bank’s chief executive Colin Hunt when he returned to Ireland.

The phone lines were humming between senior figures on the board of AIB and its executives in Dublin.

With the State owning 68.5pc of its equity, the bank was in a vulnerable position — and knew it.

By late evening the head of the powerful Oireachtas Public Accounts Committee, John McGuinness, announced that executives of AIB had been called before it to account for themselves and a provisional date of August 3 provisionally agreed.

However, this seems unlikely, as AIB is due to announce its half-yearly financial results on August 4 and would be precluded from discussing any aspects of its financial position before then.

McGuinness also said he had been in touch with Donohoe and the Central Bank about them appearing before
the committee.

Over the last decade Irish banks have gradually stripped managers of their powers, shrunk counter services to a bare minimum and employed groups of young people to escort and assist those who want a personalised service to machines, which are now doing the work of old-style bank tellers.

The main banks — AIB, Bank of Ireland and Permanent TSB — are also under pressure because Ulster Bank and KBC have unilaterally withdrawn from the market, leaving tens of thousands of customers looking for alternative banking services.

AIB has probably come in for such heavy criticism because the State is its majority shareholder and the decision to go cashless with another 70 banks was seen by many as a step too far for rural Ireland.

However, last year Bank of Ireland went cashless in 88 branches without a murmur and a similar programme is being implemented by the smaller PTSB, which has announced the withdrawal of cash services from 44 branches.

Ireland is undergoing an on-line revolution and the pandemic accelerated the trend in the financial services industry

AIB now has 1.85m “digitally active customers”. It has 2.9 million daily digital "interactions” compared with 35,000 customers visits to its bank branches.

With the increasing use of debit cards AIB has seen a 36pc decline in cash withdrawals from ATMs and a 50pc fall into what it calls “over the counter” transactions while online payments have increased by 85pc.

But for many people, none of those statistics could seem to justify last week’s decision by AIB to extend its “cashless” network.

It may not affect people unduly in the cities, but in many of the towns earmarked for a withdrawal the move was seen as the beginning of the end of the local bank.

The fact AIB was creating “AIB at An Post” which will allow people to access cash and withdraw or lodge cash from their AIB accounts at 920 post offices was either not communicated properly or got lost in the controversy that engulfed the bank.

At 11.53am on Friday, AIB caved in to mounting political pressure and in a terse statement “recognising the customer and public unease that this has caused has decided not to proceed with the proposed changes in its bank services”.

Rural political pressure and public anger may have triumphed in last week’s battle but the war is far from over.

The digital age and the gradual demise of cash will lead to further skirmishes ahead – but whatever happens, AIB will surely deploy a bigger team of strategy consultants before going back down this particular rural boreen.

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