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The changing consumer behaviours driving high street bank closures

Photo of a branch of the Royal Bank of Scotland, which is to close 259 branches resulting in 680 job losses. Picture: Philip Toscano/PA Wire

Photo of a branch of the Royal Bank of Scotland, which is to close 259 branches resulting in 680 job losses. Picture: Philip Toscano/PA Wire

It has been a tough week for high street banks in Norfolk and Suffolk.

Plans for Halifax and Lloyds Bank to close branches in Norwich, Acle, Bungay, Halesworth and Southwold – with a possible loss of 99 jobs – were revealed on Thursday,

Then on Friday Royal Bank of Scotland announced it would close six NatWest branches in Beccles, Thetford, Gorleston, Holt, Hunstanton and North Walsham between May and June 2018, as part of plans to close 259 RBS and NatWest branches nationally, putting 680 jobs at risk.

Both companies said the decisions were driven by their customers increasingly choosing to use online and mobile channels, as digital technologies changed the traditional relationship between customers and their bank.

Data from NatWest showed between 84% and 89% of customers using the affected East Anglian branches “already bank in other ways locally”, with in-branch transactions declining by an average of 30% since 2012.

Further industry research supports their claims that the customer base is favouring digital services.

The 2017 Communications Markets Report by industry watchdog Ofcom found banking to be one of the top five activities people used the internet for – with banks amassing more online users than social networking sites. Data from the Office for National Statistics supports this, showing almost two thirds (63%) of adults now use internet banking.

In its Way We Bank Now report, UK Finance found consumer activity on banking apps has rocketed by 354% in the past five years, up from 21% of people using them in 2012 to 61% at the start of 2017 – equal to 19.6 million users.

It also found people were increasingly using banking apps to access a broader range of services such as savings, credit cards and mortgage or investments accounts, rising by 30%, 46% and 86% respectively between 2015 and 2016 alone.

Electronic communications between banks and their customers, such as text alerts and video chats, are also becoming increasingly popular, replacing face-to-face communication.

UK Finance said changes in the choice of options for interacting with banks had “empowered customers in the way they choose to manage their finances”.

However, as the switch to internet and mobile banking gathers pace there are some who are not – or cannot – share in this empowerment.

Jonathan Clemo, chief executive of Community Action Norfolk, said that while most people in rural Norfolk would already have to travel to get to a bank there were other factors to consider in closing high street branches.

He said: “One issue that gets flagged up a lot in market towns is the availability of cash. Whether or not you are able to use digital services the one thing they cannot replace is cash. A lot of businesses still use it and some people are more comfortable using it.

“While broadband in rural areas has improved there are some people for whom it would still be a significant challenge to access online banking.

“I can understand the decision by the banks in many respects to focus on their online services, but what are they doing to support their customers who are less likely to be able to access those services because they do not have confidence in their IT skills or do not have the technological access?

“The challenge is often not the individual closure, but the knock-on effect on the community. If each bank pulled up a map of where their commercially viable branches are, they are likely to be the same places that would come up for a high street retailer or Post Office.

“If everyone takes those decisions [to close] over a period of time you are left with the core of that high street being gutted.”

Linda Mathews, information advice and advocacy manager at Age UK Norfolk, said the charity had been asked to help dozens of elderly Norwich and Peterborough Building Society customers open new accounts after it was taken over by Yorkshire Building Society.

“When older people opened their bank accounts they may have had passports and driving licences which have since expired or which they don’t have any more, so when they came to open a new account it proved very difficult and caused a great deal of upset,” she said.

Ms Mathews added that the opportunity for social interaction which banks provided was important to older people.

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