Customers hit by shrapnel in banking’s battle of the cost bases

I was at the Innovate Finance Global Summit last week and listened to fintech companies describing the current battle between banks being about who has the lowest cost of delivery.

Anne Boden, CEO at challenger bank Starling, said all the fintechs and banks are offering different things to different people and all the big banks will follow what the fintechs are doing in terms of product innovation. “But what they won’t be able to do is match the cost base of the challengers.”

You can see why banks are closing branches when you consider the new challenger banks having hundreds of staff rather than the tens of thousands at the high street giants.

“This is going to be a battle of the cost base, not a battle over product innovation” said Boden.

Okay then, I have just been hit by some shrapnel. As a resident of Forest Hill in South East London and a customer of Barclays bank I received a letter this week informing me that the bank’s branch on my high street is closing.

Apparently people are banking in different ways and only 108 people use the branch exclusively to do their banking. This doesn’t surprise me. In the old days a busy high street in London would be a prime location for a bank, but today with Londoners leading the take up of channels like mobile banking the opposite is probably true.

Santander announced a similar move on my high street in December also citing changing banking habits for the reason to close.

Barclays also informed me in the letter that in the last two years 84% of user of Forest Hill’s Barclays branch also use other channels like telephone and online banking. It is also telling me that 53% of the b ranches customers are using other local branches. How did it get these figures? Nobody asked me or my wife and we are both Barclays customers.

I must confess I have rarely used the branch. I came close the other day when my card wasn’t working, but decided to try the chat function on the mobile app, which I have to say was very easy.

But some people do want a local branch and why shouldn’t a bank run one in every town?

Here are some comments about the closure of Barclays in Forest Hill from some of the other customers affected.

“I am a customer of Santander and was looking at moving my account to Barclays, as I don’t trust the internet banking system, now that is cancelled. I remember when I moved into the area over 30 years ago we had three building societies Woolwich, Abbey National (Santandar) and Peckham and two banks Midland next to old post office and Barclays.”

“The proposed closure will also affect local traders, was no prior notice given that Barclay’s are to close?”

“So much for Barclays promise 20 years or so ago to keep this Branch open, after a massive local petition and involvement of the local MP at the time, as a service to the local area seeing as it was the only Bank for miles around.”

“The letter is the identical form letter sent out to the one announcing the closure of many other branches recently.”

“It’s true, you could use the Post Office for some basic banking, but it isn’t the same as having a bank branch in Forest Hill. It’s a bit rubbish that Santander and Barclays are going in quick succession. I wasn’t in the area when the earlier campaign to retain Barclay’s happened, though I suspect the bank would now argue that things have changed, more business being done online, less in branches etc.”

So is it progress or neglect?