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

Photo: Getty Images
Show Hide image

Why are boundary changes bad for Labour?

New boundaries, a smaller House of Commons and the shift to individual electoral registration all tilt the electoral battlefield further towards the Conservatives. Why?

The government has confirmed it will push ahead with plans to reduce the House of Commons to 600 seats from 650.  Why is that such bad news for the Labour Party? 

The damage is twofold. The switch to individual electoral registration will hurt Labour more than its rivals. . Constituency boundaries in Britain are drawn on registered electors, not by population - the average seat has around 70,000 voters but a population of 90,000, although there are significant variations within that. On the whole, at present, Labour MPs tend to have seats with fewer voters than their Conservative counterparts. These changes were halted by the Liberal Democrats in the coalition years but are now back on course.

The new, 600-member constituencies will all but eliminate those variations on mainland Britain, although the Isle of Wight, and the Scottish island constituencies will remain special cases. The net effect will be to reduce the number of Labour seats - and to make the remaining seats more marginal. (Of the 50 seats that would have been eradicated had the 2013 review taken place, 35 were held by Labour, including deputy leader Tom Watson's seat of West Bromwich East.)

Why will Labour seats become more marginal? For the most part, as seats expand, they will take on increasing numbers of suburban and rural voters, who tend to vote Conservative. The city of Leicester is a good example: currently the city sends three Labour MPs to Westminster, each with large majorities. Under boundary changes, all three could become more marginal as they take on more wards from the surrounding county. Liz Kendall's Leicester West seat is likely to have a particularly large influx of Tory voters, turning the seat - a Labour stronghold since 1945 - into a marginal. 

The pattern is fairly consistent throughout the United Kingdom - Labour safe seats either vanishing or becoming marginal or even Tory seats. On Merseyside, three seats - Frank Field's Birkenhead, a Labour seat since 1950, and two marginal Labour held seats, Wirral South and Wirral West - will become two: a safe Labour seat, and a safe Conservative seat on the Wirral. Lillian Greenwood, the Shadow Transport Secretary, would see her Nottingham seat take more of the Nottinghamshire countryside, becoming a Conservative-held marginal. 

The traffic - at least in the 2013 review - was not entirely one-way. Jane Ellison, the Tory MP for Battersea, would find herself fighting a seat with a notional Labour majority of just under 3,000, as opposed to her current majority of close to 8,000. 

But the net effect of the boundary review and the shrinking of the size of the House of Commons would be to the advantage of the Conservatives. If the 2015 election had been held using the 2013 boundaries, the Tories would have a majority of 22 – and Labour would have just 216 seats against 232 now.

It may be, however, that Labour dodges a bullet – because while the boundary changes would have given the Conservatives a bigger majority, they would have significantly fewer MPs – down to 311 from 330, a loss of 19 members of Parliament. Although the whips are attempting to steady the nerves of backbenchers about the potential loss of their seats, that the number of Conservative MPs who face involuntary retirement due to boundary changes is bigger than the party’s parliamentary majority may force a U-Turn.

That said, Labour’s relatively weak electoral showing may calm jittery Tory MPs. Two months into Ed Miliband’s leadership, Labour averaged 39 per cent in the polls. They got 31 per cent of the vote in 2015. Two months into Tony Blair’s leadership, Labour were on 53 per cent of the vote. They got 43 per cent of the vote. A month and a half into Jeremy Corbyn’s leadership, Labour is on 31 per cent of the vote.  A Blair-style drop of ten points would see the Tories net 388 seats under the new boundaries, with Labour on 131. A smaller Miliband-style drop would give the Conservatives 364, and leave Labour with 153 MPs.  

On Labour’s current trajectory, Tory MPs who lose out due to boundary changes may feel comfortable in their chances of picking up a seat elsewhere. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog. He usually writes about politics.