Following news this week that Lloyds Bank will be closing 49 branches, the Royal Bank of Scotland has made the announcement that it will be closing 259 of its high street branches. Around a quarter of the existing branches are due to shut, and it’s estimated that this will mean up to 1000 job losses. RBS has also suggested that there will be 680 redundancies when the branches close.
RBS said “We expect these branch closures to result in around 680 redundancies. We realise this is difficult news for our colleagues and we are doing everything we can to support those affected. We will ensure compulsory redundancies are kept to an absolute minimum”
Are the closures necessary?
The bank has reported that it’s seen losses every year since its bailout in 2008 and chief executive, Ross McEwan, has been looking to increase the use of online banking among its customers for some time in order to boost profits. The closure programme was announced earlier in the year and follows similar axes from other banks including Lloyds and HSBC.
A spokesperson for RBS defended the closure, saying that the number of customers using their face to face service has fallen by 40% since 2014, while the use of mobile banking has seen an increase of 73% in the same time. With over 5 million customers using their app, and 20% of customers using it exclusively, he said the cuts are unavoidable.
Concerns over the level of service
Unions fear this to mean the end of high street banking, as the 71% taxpayer owned bank is to cut its face to face service and move towards more online and telephone banking. Rob MacGregor, Unite’s national officer, described the move as “savage”, saying that “The Royal Bank of Scotland has decided to decimate its bank branch network.”
“Now serious questions need to be asked about whether these closures mark the end of branch network banking. This announcement will forever change the face of banking in this country resulting in over a thousand staff losing their jobs and hundreds of high streets without any banking facilities.”
The cuts to branches, along with the planned closures of ATM’s are raising concerns that vulnerable customers will receive an inadequate service. The banks have argued that they are facing increasing competition from new online banking services whose reduced costs are forcing them to move to online banking to compete. The Bank of England commented that new financial technology “may have profound consequences for incumbent banks’ business models.”