PRESSURE is growing on the Royal Bank of Scotland to review its branch closure programme amid concerns over the impact on local communities and vulnerable customers.
Scotland’s biggest bank has been under fire from MPs and MSPs since announcing the latest tranche of closures last month, including rural branches it had once pledged to keep open.
They are forced to go elsewhere and take their everyday spend with them
The state-backed bank has already closed 23 branches in Scotland since the start of the year and now plans to shut another 20 before 2015 is out.
“Our customers are increasingly using alternative ways to bank, such as online and mobile banking,” said a spokesperson for RBS. “As a result, branch transactions have declined by around 36 per cent since 2010 whilst online and mobile transactions have grown by more than 300 per cent.”
Barclays and HSBC are also closing large numbers of branches this year, but not to the extent of RBS and NatWest.
Royal Bank closures have accelerated since its pledge to keep the “last bank in town” open – which featured heavily in the promotion of its 2011 “customer charter” – was quietly abandoned last year.
Derek French, director of the Campaign for Community Banking Services (CCBS), said: “Loss of bank branches can be devastating to communities, particularly rural hubs and suburban retail centres, as customers whose main need is to use the bank are forced to go elsewhere and take their ‘everyday spend’ with them.”
Several villages and towns in rural areas of Scotland will now be left without banking facilities. The closure of the RBS in Ballachulish in December means customers needing branch access must travel 15 miles to the closest branch in Fort William – potentially a round-trip of several hours for those reliant on public transport.
RBS has sought to compensate for branch closures in some rural areas by increasing its mobile banking services.
“We have around 200 branches in Scotland and a further 19 mobile branches as well as our flying banker [who serves the communities on the islands],” said a spokesperson for the bank.
But this is rarely sufficient, said French, who added that 24 of the branches closed in 2014 were the last in their community.
“For the most remote areas, where the bank was often only open for very limited days/hours, substitution of a weekly mobile bank visit is probably acceptable, but moving from a four or five-day branch to nothing is unacceptable behaviour and the post office is often a poor substitute.”
MPs and MSPs across Scotland have called on RBS to rethink closures in their constituencies. They include Deputy First Minister John Swinney, who last week described plans to shut the branch in Alyth as “very insensitive”. Corri Wilson, MP for Ayr, Carrick and Cumnock, said the planned November closure of the RBS branch in Maybole showed the bank was “yet again… letting down rural communities”.
In a motion tabled at Holyrood, Labour MSP Neil Findlay has condemned RBS’s refusal to “consider the asset transfer of closed bank branches to community organisations wanting to take over the buildings”, adding that it was “a huge missed opportunity for RBS to recognise the loyalty and commitment of long-standing customers”.
Harriett Baldwin, economic secretary to the Treasury, wrote to the British Bankers’ Association last month expressing concern at the rate of branch closures, highlighting the need for banks to “provide adequate alternative banking arrangements reflecting local circumstances”.
Banks must adhere to the Access to Banking Protocol when planning closures. Under the protocol, set out in March, they have to provide at least 12 weeks’ notice of closure and publish an assessment of the impact it might have on customers. It doesn’t bind them to reviewing their decision if the assessment uncovers a significant impact on elderly or disabled customers, however. The protocol has also been criticised for depending too heavily on post office outlets to take up the slack.
One widely mooted compromise is a move to sharing centres (which RBS refused to comment on). This model, used widely in the US, provides a branch that’s open to customers of all banks on every day. It offers transactional facilities only and connects to customer’s own bank using ‘gateway’ technology (similarly to the Link cash machine network).
But calls for the UK to develop shared banking services have so far been flatly rejected by both the government and the industry.
Their reluctance stems partly from competition concerns, French believes. “The technology is here already, but banks have done everything possible to oppose it and successive governments have been weak in not getting to grips with the need and pushing the banks at least into pilot stage,” he said.
The number of UK bank branches closing their doors for the final time could reach 600 this year, up from 477 in 2014, he said.
“The writing has been on the wall for a long time, but all the banks have failed to grasp the need for sustainable substitutes for branches which inevitably had to close.”