Are High St Banks Outdated?
There was a time not so long ago when the news was full of stories about all the major financial institutions in this country shedding staff. For those companies that operated branches sitting in the High Street they were often the first place for the cull to happen.
Does this mean the finance companies themselves see High Street banking as being out of date and can we possibly do without them altogether?
“It makes business sense” is a phrase that is often bandied around board rooms. Whether or not it was ever bandied around the board rooms of the big finance houses when they were shedding staff we will never know. However, it’s an expression that clearly eliminates the reason the company is in business to start with and that is people. These banks need people to lend money to or they won’t make profits.
By cutting back on their staff and sharpening up, (i.e. eliminating), their presence in the High Street don’t these banks simply alienate their customers?
The Chicken and the EGG
We know which came first, the chicken. The High Street Banks have been there for decades. The Banking industry has been shaken up by the Internet with companies like EGG (Prudential) and First Direct (HSBC) proving there is a demand for cyberspace finance. In just two years after it was created, EGG had gathered 900,000 customers. That was in 2000; imagine what its customer base is like today expanded by the extensive investment in television advertising that it employs.
It is estimated that there are over 9 million people who use internet banking. 40% of those 9 million are under 35 years old and consider internet banking to be far superior to the traditional High Street Branch method.
Not without a fight
That is not to say that everybody agrees with them. There are those, particularly the lower wage earners including the more elderly, who will always want to use a branch in the High Street instead of the internet.
The traditional financial institutions have found themselves having to build internet platforms for those customers who want that convenience as well as sustaining a substantial High Street presence. But in so doing they are hampered by having to develop the New Technology with their old systems which don’t allow them to have the same flexibility as the new internet-only competitors.
These traditional companies will have a hard fight on their hands to offer the same sort of deals and interest rates provided by the new kids on the block.
Upwardly Mobile Banking
The High Street is fighting back and using Technology to do so. In its effort to stay current and not go the way of the dinosaurs High Street Banks have introduced what is known as Mobile Banking.
Just recently they have introduced a way for you to access details about your account from your mobile phone. You can get a balance, check payments, even top up your pay as you go card, all from your handset.
Then there is a completely different concept which, confusingly, is also known as Mobile Banking but which is far less technologically based. This is being championed by Natwest in Cornwall where they lumber a four wheeler round the lanes to the rural communities so that those with little transport can access their accounts, pay in cheques and make withdrawals. Inside, the four-wheeler is even decked out to look like a branch found on any High Street.
This plan by NatWest follows on from the recent excursion by HSBC which did a very similar thing, only to abandon it after a short while because it was deemed uneconomic.
There must be something about Branches that make these financial giants want to keep them alive after all.
It’s in the water
A recent survey may have found the answer: Consultancy, Booze Allen Hamilton recently declared that 80% of customer bank relationships are forged in the good old fashioned way: in branches. Given that consumers are very reluctant to shop around once we are with a bank, you can start to see why Banks are hanging on to their High Street presence, despite the internet and despite protestations that Branches are outdated.