Banks and the high street

As our banking behaviour heads online, major job losses will follow

So when was the last time you visited a bank branch? Now, be honest. The chances are that you are popping into your bank branch a lot less frequently than, say, three years ago, let alone 10 years ago.

Need to check your balance? Easy: go online. Pay a bill: ditto. Transfer cash between accounts, set up a direct debit - the answer is the same.

For many customers, the majority of everyday banking transactions can be conducted online or with a call centre or increasingly via smartphones and tablet devices such as the iPad.

This change in consumer behaviour is not yet apparent on the majority of UK High Streets but give it time.

Bank branch closures have been galloping along at a fair rate of knots in the past decade but until now have largely focused on small towns and rural communities.

Almost one-in-five UK bank branches have closed since 2000 with Barclays’ branch network for example down from 2,129 to 1,700; HSBC is down from 1,670 to 1,300 during the same period.

In the next decade, the High Streets of our larger towns will witness a major change in the number of bank branches and in branch design.

A relatively small number of flagship bank branches, vaguely along the lines of Apple Stores, will spring up in the larger cities.

But for the vast majority of us, the typical bank branch will be much smaller in scale, largely self-service with all cash held in ATMs as banks cotton on to a greater use of self-service terminals.

From a design standpoint, the branch will become more like a retail store.

Have you been in a newish branch of HSBC or Barclays recently-you get the picture?

Major job losses to come

Since the banking crisis really gathered pace post Lehman in 2008, job losses have tended to focus in the back office; investment banking roles have also been scaled back.

Staff performing IT and other support roles have been particularly badly hit in the past three years or so at the high street lenders.

Last year alone, HSBC announced plans to axe 30,000 positions around the world.

Lloyds said that it would eliminate 16,800 positions, about 1 in 6 of its total workforce.

Elsewhere, Barclays is dispensing with 3,000 roles and counting and it is the same story at major banks across Europe.

Last year, banking job cuts across Europe topped 70,000.

But job losses at the High street branch level have barely started.

Take RBS. It is one of the most enthusiastic cost cutters in the High Street – all of course part of its masterplan to “rebuild the bank”.

Last year, it managed to lose a mere 500 branch staff, reducing retail banking total employment from 28,200 to 27,700.

There is far worse to come.

If the bank branch is to prosper, the customer experience will have to change.

Virgin Money’s lounge vision, providing a comfortable space for customers to have a coffee, relax, check emails or charge mobile phones, demonstrates how a banking brand can attempt to restore trust, deliver something different and attract customers.

Another high street strategy entirely is being pursued Lloyds TSB, where a new branch design is designed to enhance the role of the bank within the local community.

In a number of its markets – but not yet in the UK - Santander has rolled out Santander Select outlets, upmarket branches providing a level of comfort not normally associated with a humble bank branch.

Nationwide Building Society is also investing with plans to refurbish its entire retail network of 700 outlets over the next two years.

That is about it for good news.

 

Douglas Blakey is the editor of Retail Banker International

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Who will win in Stoke-on-Trent?

Labour are the favourites, but they could fall victim to a shock in the Midlands constituency.  

The resignation of Tristram Hunt as MP for Stoke-on-Central has triggered a by-election in the safe Labour seat of Stoke on Trent Central. That had Westminster speculating about the possibility of a victory for Ukip, which only intensified once Paul Nuttall, the party’s leader, was installed as the candidate.

If Nuttall’s message that the Labour Party has lost touch with its small-town and post-industrial heartlands is going to pay dividends at the ballot box, there can hardly be a better set of circumstances than this: the sitting MP has quit to take up a well-paid job in London, and although  the overwhelming majority of Labour MPs voted to block Brexit, the well-advertised divisions in that party over the vote should help Ukip.

But Labour started with a solid lead – it is always more useful to talk about percentages, not raw vote totals – of 16 points in 2015, with the two parties of the right effectively tied in second and third place. Just 33 votes separated Ukip in second from the third-placed Conservatives.

There was a possible – but narrow – path to victory for Ukip that involved swallowing up the Conservative vote, while Labour shed votes in three directions: to the Liberal Democrats, to Ukip, and to abstention.

But as I wrote at the start of the contest, Ukip were, in my view, overwritten in their chances of winning the seat. We talk a lot about Labour’s problem appealing to “aspirational” voters in Westminster, but less covered, and equally important, is Ukip’s aspiration problem.

For some people, a vote for Ukip is effectively a declaration that you live in a dump. You can have an interesting debate about whether it was particularly sympathetic of Ken Clarke to brand that party’s voters as “elderly male people who have had disappointing lives”, but that view is not just confined to pro-European Conservatives. A great number of people, in Stoke and elsewhere, who are sympathetic to Ukip’s positions on immigration, international development and the European Union also think that voting Ukip is for losers.

That always made making inroads into the Conservative vote harder than it looks. At the risk of looking very, very foolish in six days time, I found it difficult to imagine why Tory voters in Hanley would take the risk of voting Ukip. As I wrote when Nuttall announced his candidacy, the Conservatives were, in my view, a bigger threat to Labour than Ukip.

Under Theresa May, almost every move the party has made has been designed around making inroads into the Ukip vote and that part of the Labour vote that is sympathetic to Ukip. If the polls are to be believed, she’s succeeding nationally, though even on current polling, the Conservatives wouldn’t have enough to take Stoke on Trent Central.

Now Theresa May has made a visit to the constituency. Well, seeing as the government has a comfortable majority in the House of Commons, it’s not as if the Prime Minister needs to find time to visit the seat, particularly when there is another, easier battle down the road in the shape of the West Midlands mayoral election.

But one thing is certain: the Conservatives wouldn’t be sending May down if they thought that they were going to do worse than they did in 2015.

Parties can be wrong of course. The Conservatives knew that they had found a vulnerable spot in the last election as far as a Labour deal with the SNP was concerned. They thought that vulnerable spot was worth 15 to 20 seats. They gained 27 from the Liberal Democrats and a further eight from Labour.  Labour knew they would underperform public expectations and thought they’d end up with around 260 to 280 seats. They ended up with 232.

Nevertheless, Theresa May wouldn’t be coming down to Stoke if CCHQ thought that four days later, her party was going to finish fourth. And if the Conservatives don’t collapse, anyone betting on Ukip is liable to lose their shirt. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.