Sweeping trend towards digital banking forces RBS branch closures

Royal Bank of Scotland (RBS) will close another 99 branches after being “taken aback” by the pace at which customers are moving to digital services.

According to a Financial Times report, a senior executive told a House of Commons committee that hundreds of millions of transactions previously completed in branches have now moved online.

“We are seeing a revolution in the way our customers want to bank,” Moray McDonald told the committee. “We have been literally taken aback.”

He said the bank has identified 99 branches for closure, but said this figure could change.

In April last year, the bank announced the closure of 44 branches in the UK after a 30% fall in the number of transactions made in branches.

An RBS spokesman said at the time: "Banking has changed significantly over the last few years, as more and more of our customers are banking with us when it is convenient for them. As a result, there has been a 30% drop in branch transactions since 2010.

"Many branches classed as ‘Last Bank in Town’ are only open for a few hours a week and only see one or two customers per hour. We have to adapt to what our customers want, which is why we're investing in a range of other ways our customers can bank with us, including online and telephone banking, our mobile app, and in any one of the Post Office's 11,500 branches across the UK."

Banks must balance digital and traditional services to compete with new financial service providers with low-cost bases and state-of-the-art technology. Earlier this week, Ana Botín, chairman at Santander, insisted bank branches have value, even if far fewer people are visiting them. “The fact is, even young people like to go to a branch at least twice a year. That means you need quite a significant retail presence, which the tech companies don’t have,” Botín added. 

Santander has 14,000 branches in the UK, US, Latin America and continental Europe.

A study last year revealed that customers' use of bank branches is increasing in parallel with the surging take-up of online banking services

A survey of more than 3,600 current account holders in the UK, carried out by Accenture, found that 52% use a branch at least once a month, compared with 45% when the last study was carried out in 2012. 

Nazzim Ishaque, founder of Lintel Bank, which is currently attempting to get a banking licence, said that despite the importance of new technology the branch should never disappear. “But branches should transform from being about over-the-counter services to being customer service centres.”

He said that if Lintel Bank gets approval, it will initially have five branches across London, where it will be based.