Gavin McLoughlin
Gavin McLoughlin

15.36 12 Jun 2019


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Will online banking mean the branch disappears from the High Street?

The world is in the middle of a new industrial revolution, with the internet gobbling up all sorts of industries. The CD and the DVD are going the way of the dodo, and with the move to online banking in recent years, it's easy to see how the bank branch could end up in the same position.

KBC Bank Ireland set up a retail presence here in 2012. Online banking had come along by then, but despite that the Belgian bank decided it would make the expensive decision to open a network of branches here. KBC calls them 'hubs'.

Darragh Lennon, KBC's director of distribution here, said the bank thought it important to be able to provide a face-to-face service.

"Our hubs are primarily focused on customers who want to come in for more of an advisory-type product, customers don't want to come in and open up a current account," Lennon told Newstalk.

"They've opened their current account through the mobile app or our website, and they're coming in [to talk about] an investment. a mortgage, life insurance - those slightly more complicated journeys where they still want that reassurance of a face-to-face interaction."

Butt the story is complicated however by technologies like Skype, which provide face-to-face interaction without having to go to a branch.

AIB is already using this technology for some customer interactions, and is looking to roll it out further in future, the bank's chief digital officer Fergal Coburn said.

Combine that with declining footfall on the streets as shoppers move online, and the decline of cash, and the economics of the bank branch appear to make even less sense. Many branches are in large buildings containing all the infrastructure that's needed for handling cash - vaults, tills, specialist security technology etc.

That won't be needed as much as cash usage declines, meaning it may make more sense for a branch to move to a smaller building, with less cash infrastructure, that's easier to maintain.

Flower arranging

On the other hand, it may open up opportunities for banks to do something different with their branches. Bank of Ireland, for example, has opened up "workbenches" in some of its outlets, providing space for businesses to work and put on events.

"We've had flower-arranging, we've had yoga classes," says Bank of Ireland's director of distribution channels Aine McCleary, adding that the idea is to "assist the community to thrive".

Keeping branches open will be important for those communities of which McCleary speaks - not only in terms of the services they provide to communities but also because of the employment they provide.

None of the banks Newstalk spoke to would say whether they will close branches but the economics appear to lean in that direction. At the very least, the services on offer there look set to be very different.

It's yet another example of how the internet is changing everything, as Newstalk's deputy business editor Gavin McLoughlin told The Pat Kenny Show.

Bank branches face uncertain future

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