ROYAL Bank of Scotland managed to prompt feelings of irritation, exasperation and dismay with its latest branch closure announcement. Given how used we have all become to its cost-cutting, this was something of an achievement.
While it is just the latest in a string of cost-cutting moves by the Edinburgh-based bank, it is important not to overlook the scale of what is being done. Royal Bank has said it will cut 62 branches in Scotland – significantly more than one-third of the 151 it has north of the Border. The move is expected to trigger around 158 redundancies.
So, even taking into account the expectation that has been created in recent years of frequent and relentless cost-cutting news from the bank, it was hardly surprising that dismay over the latest announcement seemed widespread, with politicians, trade unionists and businesses among those lamenting the decision.
And the branch closure announcement from Royal Bank surely offered plenty of scope for widespread irritation and exasperation.
We all know by now that Royal Bank chief executive Ross McEwan is very focused on mobile phone banking.
Now, there is no problem with developing technology to enable those who wish to deal with the bank through this channel to do so. And yes, as Mr McEwan so often points out, the number of customers using their mobile phones to bank is growing.
However, what the taxpayer-backed Royal Bank must remember is that these customers are no more or less important than those who prefer to use a branch.
Many big consumer-facing companies appear to be trying increasingly to tell their customers they should be changing the way they transact, whether they are purchasing or booking something, banking, or investing. This invariably involves some online push. Such online drives suit some customers, and they often save bags of money for companies, but they can be extremely inconvenient for people who do not want to conduct their business in this manner.
And this brings us nicely to the source of irritation in Royal Bank’s latest announcement.
In what may well have come across to some as a patronising tone, even if this was not the intention, Royal Bank said: “We know that not all of our customers are comfortable or familiar with using online or mobile banking, so we have created a new specialist taskforce of TechXperts who will be dedicated to supporting our customers with training and support with digital skills.”
This makes it sound almost as if these customers are actually members of Royal Bank’s staff who are being signed up for some kind of essential digital skills training course. It is maybe worth observing that the “TechXperts” moniker is in itself annoyingly trendy, or something like that, but then again that is the least of it in the scheme of things.
In reality, the people being targeted by the TechXperts are not employees being made to undertake training but customers who are perfectly at liberty to move their banking elsewhere if they feel they cannot conveniently do it in their preferred way.
Royal Bank talks about how it will have 16, seemingly roving, “community bankers” across Scotland by the end of March. And it declares “the majority of closing branches will have either a community banker or mobile branch available”.
However, instead of providing reassurance as presumably intended, this assertion merely highlights the huge degree to which future provision to customers in terms of face-to-face contact with bank staff will be less than what is available at the moment.
The extent of the cost-cutting since the taxpayer bail-out of Royal Bank - after it came close to collapse in autumn 2008 in the wake of the failure of US investment bank Lehman Brothers – has been both astonishing and very disappointing. Many, many thousands of jobs have gone.
To be fair to Royal Bank’s various executives during its period under state control, the institution has had to sell off some of the best parts of its business, notably US and global operations, seemingly driven in no small part by a view among politicians that the taxpayer should be backing only British operations.
The problem is, given the lamentable state of the UK economy, it is such overseas operations that would have generated better returns for the taxpayer and enabled the bank to be returned more swiftly to full private sector ownership.
That said, Mr McEwan appears to have had his eye on major cuts to the branch network since before he became chief executive of Royal Bank, which is more than 70 per cent-owned by the taxpayer, in autumn 2013.
In April 2013, when he headed the institution’s UK retail banking operations, he revealed to The Herald that about 10 per cent of branches could be closed. This signal was pretty dramatic at that stage, but it has turned out to be something of an under-estimate, as can be seen from the Scottish numbers.
Mr McEwan said then: “I think, across the UK, we have probably still got too many branches.”
Commenting on the proportion of UK branches that might be closed, Mr McEwan had added: “I think probably around the 10 (per cent), possibly less than 10 (per cent). It is not big numbers.”
At that stage, Royal Bank had about 300 branches in Scotland. Soon it will have 89, plus what are described by the bank as “three cash shops, which are cash deposit and pick-up points for businesses”.
Talking of firms, it was good to see the Federation of Small Businesses come out strongly against the latest branch cuts from Royal Bank. The FSB also observed the axing of further Bank of Scotland branches north of the Border, in the latest cull by Lloyds Banking Group.
Andy Willox, the FSB’s Scottish policy convenor, said: “This is bitterly disappointing news, particularly for those bank workers whose jobs are under threat but also for the Scottish towns, cities and villages affected. Ultimately, these changes will make it more difficult to run a business in much of Scotland, including many deprived communities and tourism hotspots.”
He added: “While many small businesses use online banking, that doesn’t mean they don’t handle cash, and [they] therefore need to visit a branch. Further, many of the branches under threat are in parts of the country with particularly poor mobile and broadband coverage – a fact to which RBS seems to be paying scant regard.”
These points are well made.
Royal Bank made much last week of having increased the period between the decision to shut branches and their actual closure to six months.
It should use the six months to change its mind. Fat chance though.
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