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Bank withdrawals hit the high street hard

It is always sad to see long-standing high street bank branches close.

The act seems to signal the ending of an era, one in which every working person knew their local bank manager, not to mention their local grocer and newsagent.

News that the Paisley Central branch of RBS is to shut in May will dismay those customers who still regularly pop into the branch.

There is, of course, no denying the challenges faced by high street banks in the wake of changes to the way people manage their finances. The latest RBS television advert reflects this. Within the space of 40 seconds, it features the RBS phone app, 24/7 online web chat facility, mobile branches on four wheels and a traditional high street branch.

Online technology is reducing footfall in bank premises. RBS has experienced a 30% drop in its branch transactions since 2010 and a 15% drop in customers at the Paisley Central branch. It should be able to demonstrate for this, and every branch slated for closure, that customer numbers compare badly with other branches. That said, with customer numbers dropping, some branches are bound to become uneconomic to run.

Being 85% publicly owned, RBS has a responsibility both to minimise costs and maximise value for the taxpayer, and to provide the best possible service to customers at the same time. That is the challenge facing Les Matheson, the new head of RBS's UK retail bank, who will probably have to oversee further branch closures while increasing "points-of-presence" for customers, including automated teller and cash-deposit machines, in places such as shopping centres.

That is understandable, but losing branches represents a risk for banks too, since it does not make it any easier to rebuild trust with customers. This is, after all, the self-professed priority of all of the big banks. The sight of bank chief executives speaking penitently of the need to win back public trust has become all too familiar yet branch closures remove precious opportunities for face-to-face contact between staff and customers.

It is the impact of branch closures on customers and the community that is of most concern, though. Not everyone has a mobile phone that allows them to move money in seconds; not everyone feels confident using a computer. Many, particularly some elderly people, rely on their local branch and have known the staff for years. Losing that branch can be a major blow.

What is more, a customer visiting their bank to pay in a cheque or arrange an overdraft might also pop next door to pick up a few bits and pieces at the grocer's, have their hair cut or meet a friend for coffee. The fewer reasons there are to visit our high streets, the more likely they are to become run-down avenues of To Let signs punctuated by the occasional takeaway or betting shop.

The demise of more high street premises seems sadly inevitable. Barclays has announced 7000 job losses, including some branch-based roles. For Barclays, RBS or any other bank, however, the decision on which branches to close must be considered with the utmost care.

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