Lloyds Baking Group continues to cut bank branches, with 49 closures announced this week as part of its closure programme. There are also 99 job cuts planned.
Lloyds bank is not alone. Recent figures from the European Banking Federation (EBF), which include the UK, revealed more than 9,000 bank branches were closed in 2016, and more than 50,000 people working at those banks lost their jobs.
But if artificial intelligence delivers on its promise these cuts might seem small scale compared to what will come. One day your bank might be a red dot on a screen that you talk to and hope it never says “Sorry Dave I can’t do that.”
Some of the new banks like Starling don’t even have branches but are app based.
Lloyds Bank like other traditional high street banks will retain some branches but how many bank branches will survive digital transformation age?
Rob MacGregor, Unite national officer thinks enough is enough and not just because members of the union are losing their jobs: “Lloyds Banking Group needs to halt this unnecessary bank branch closure programme. Local communities are making it clear that the closure of their local branch excludes customers who cannot use digital means to conduct their financial transactions,” he said following the announcement.
I was with TSB this week to have a look at some of the stuff the bank will be able to do digitally through its Proteo4UK core banking platform. There was lots of cool stuff including authentication through reconising a customers face. I was shown a demo of the tech and was very impressed how easy it was to use and how fast it authenticated the user. Of course this was a demonstration so I would expect it to be glitch free. TSB also promoted its new branch model. Although there will be some closures when there are lots of branches close together it is upgrading them to help users get more from technology.
Back in 2015 in a report entitled Why branches matter in the digital age, TSB CEO Paul Pester said banks shouldn’t be deciding between branches or technology, but investing in both. At the time research TSB’s own research found that the bank branch was the most used channel, with 36% of customers only using branches of the bank, 22% using online only and 2% using just telephone banking. Some 24% use a combination of branches and online, while 7% use all three channels. The TSB study also found that 88% of personal banking accounts were agreed, 85% of mortgages were applied for and 71% of personal loans were taken out in branch.
But a lot has happened since 2015 with even online banking being usurped by mobile app based banking. According to British Banking Association research 38% of people in the UK regularly use apps to bank, with revealed over 19 million people in the UK regularly logging on to mobile banking apps in 2016. According to Visa 53% of young people between the ages of 18 and 34, known as millennials, regularly use mobile apps to bank.
But bank branch closures and branch staff cuts could just be the tip of the iceberg for what could come when banks get artificial intelligence right. Just wait until all customer queries and tech glitches are automatically fixed without any human involvement. In the not too distant future when a customer is having trouble using the mobile app he or she will be able to look the bank in the eye through the mobile and tell it the problem in any language. This will be translated to an autonomic platform that will fix the problem before anyone else experiences and the customer that reported it will have little trouble. Then the next time it happens it will be fixed before anyone notices it.
So the branch and branch staff cuts today might be nothing compared to the cuts to operations that might come in the future. Thousands of customer support and IT support staff might be seen as surplus to requirements.
And it doesn’t end there. There are banks using AI to offer customers financial advice. NatWest for example is offering consumers an investment advice service automated through software. The automated financial advice services led to a 220-employee reduction in its face-to-face adviser roles. Customers using the service will be asked about their aims as well as their attitude to risk and will be given automatic advice based on this through the platform. So it will do pretty much do what the people did before which was stick to the script.
Financial services is one of the biggest employers in the world but the cuts that technology could lead to might actually be enough to destabalise societies. What are people going to do in the future and who is going to pay all the tax?