Sweden’s Handelsbanken is set to cut its branch network by nearly half, but plan to invest heavily in IT to offer customers digital alternatives.
The bank said it will reduce its branch network from 380 to about 200 by the end of next year. At the same time, the bank said it will invest SEK1bn (€87m) “in IT to take its digital customer offering to an entirely new level”.
About 1,000 jobs in Sweden will be cut as part of the plan that will see operating costs reduced.
Handelsbanken said that, despite the branch reduction, it will be enabling customers that use remaining branches to do more within them. “Handelsbanken is now strengthening its presence at the branches to meet the demands of, for example, corporate customers and private banking customers. This will be achieved through the granting of an even greater degree of decision-making authority and increased accessibility to specialist expertise, although in fewer locations,” the bank said in a statement.
The decision to implement the change came after the result of the Swedish part of the review of the entire Bank’s business operations, announced last year. These changes will help the bank lower its operating costs.
Negotiations and consultations with the 1,000 staff set to lose their jobs are happening now with trade unions. “Our ambition – as always at Handelsbanken – is to manage redundancies with care and respect for individual employees,” said the bank’s CEO, Carina Åkerström.
The shuttering of branches by banks has been going on for years as they attempt to cut costs and move people into digital channels.
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The projected capital spending by Nordic banks, mainly directed at specific investments in digital, artificial intelligence (AI) and robotics, is expected to exceed €1bn by 2024, according to a Nordic Council’s Economic Board prediction.
The growing presence of digital banks and financial technology (fintech) firms across Nordic markets is forcing the big Nordic banks to become innovative rather than passive, and ramp up their technology-capacities.
The Covid-19 pandemic will accelerate the move to digital channels and traditional bank branch networks and staff will be impacted. Covid-19 lockdowns across the world, which saw bank branches closed and restrictions put on their activity when they reopened, have driven many consumers to digital banking services rather than branches.
While contactless payments, mobile money management and mobile payments have increased in volume, banks have also offered face-to-face services via video link to customers who want human interaction when making financial decisions.
The use of cash has also plummeted. According to a survey of 2,000 people from Nationwide Building Society, the average respondent has gone more than six weeks without using cash.
Digital payments are unsurprisingly increasing, with many people using them for the first time. Lockdown has forced 27% of respondents to use mobile payments and 25% to use online or mobile banking for the first time.