Bank of Ireland’s decision to close 103 branches across Ireland, North and South, comes as a blow to many of the affected areas, despite the plans to make some services available in local post offices. The bank is pointing to the decline in footfall in branches and the rise in digital banking as creating a tipping point that makes closures inevitable. There must be concern that there is more to come.
Banks are pushing people to use digital channels to cut their own costs. Also, decision-making is now more central than local, partly for regulatory reasons. This means fewer services delivered locally, causing anger in rural Ireland. As a minority shareholder, the Government cannot control what goes on in Bank of Ireland, which has maintained a larger branch network than its rivals. But the move underlines the policy challenges in trying to sustain competition in a tough market, compounded by the departure of Ulster Bank.
The timing of the announcement is unfortunate, meaning jobs losses and further closures in town and city centres, already hit by the pandemic. Another big policy challenge for Government – national and local – will be how to revive these largely shuttered areas in the years ahead.
The value of some of the branches being closed – such as those operating purely self-service operations – was debatable. Other full-service branch closures will cause real inconvenience. The digital divide means many customers are happy to operate online while other, often older or less well-off customers get left behind.
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Serving this latter group is an area where banks often do a poor job. With the Ulster Bank network also under threat, there is a real issue here. Could it be an opportunity for An Post, which already provides basic services for some other banks and will be doing so in future for Bank of Ireland, to expand further its local role? It is dispiriting that the main tactic of the big banks appears to be retrenchment and cutting costs, and that interest rates and charges to customers still remain high. And with banks booking big losses because of pandemic write-offs, there may be more to come.