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Lloyds Banking Group has announced the closure of 48 more bank branches, citing reduced usage as the driving factor. The cuts, which will leave the bank with 1,475 branches, could lead to 178 job cuts.
Banks in the UK and across Europe are closing branches and encouraging customers to use digital channels, including mobile banking.
The Covid-19 pandemic, which saw lockdowns force businesses to close customer-facing operations, has speeded up the migration to digital channels.
“Like many other businesses, we’ve seen people using our branches less frequently in recent years, and this decline is continuing,” said Vim Maru, retail director for Lloyds Banking Group.
Maru said the bank is seeking the right balance between digital and physical channels. “Our branches remain a fundamental part of how we serve our customers, but we need to ensure the size of our branch network reflects the number of customers wanting to use them,” he added.
Redundancies and branch closures are enabling banks to cut operational costs in the face of heightened competition from digital-only financial services firms that operate at a fraction of the cost of traditional banks.
By contrast, traditional banks are investing heavily in IT, with IT recruitment drives and the establishment of tech hubs, for example.
News in December 2020 that app-based digital challenger bank Starling had become the first of the new digital banks to make a profit fired another warning shot to the big banks. These challengers are not a flash in the pan and big banks must invest heavily in tech if they are to stay relevant.
Sharon Graham, general secretary of the Unite union, which represents Lloyds staff, criticised the latest announcement. “This sector needs to start taking their corporate social responsibilities seriously and stop neglecting their obligations to their customers and workforce,” she said. “Banks are leaving people behind in the rush to close bank branches and force consumers to go cashless to boost their mega-profits. It’s a classic example of putting profits before people.”
Graham called for regulation to ensure banks keep branches open. “Unite believes the time is overdue for the banking industry to have a legal commitment to protect access to cash and bank branches, especially in communities blighted by social deprivation,” she said. “We cannot allow the most vulnerable in our society to continue to be overlooked by the banking sector. Bank branches and ATMs are vital public services for us all.”
Read more about bank branch closures in the digital age
- Sweden’s Handelsbanken set to cut branch network by nearly half, but plans to invest heavily in IT to offer customers digital alternatives.
- HSBC closing a further 82 branches as Covid-19 pandemic reinforces its strategy to move customers to digital channels.
- Co-operative Bank to rely more heavily on digital channels as 18 more branches are shuttered.