Scott Wright: Banks should think of customers next time they swing the axe on branches

Who needs friendly and helpful branch staff, able to offer valued advice, when you can devote even more of your life gazing into a faceless app?

That seems to be the underlying, continuing narrative employed not just by Virgin, but pretty much all of the major banks as they have explained away brutal cuts to branch networks in recent years. Lloyds Banking Group gave a similar line in January when it revealed it will close 15 Bank of Scotland branches this year.

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The latest cuts at Virgin will see it shut 22 branches, including six in Scotland, between May and September, with a further 30 to be consolidated into other Clydesdale, Yorkshire Bank or Virgin Money locations within half a mile.

With the bank having already closed a raft of branches last year, when five were shut to reduce the Scottish total to 62, the most recent cuts will leave it with a UK network of just 166.

Given the way the wind has been blowing on branches for several years now, it will be foolhardy to think this will be the last of it.

The latest cull comes as the bank continues to reduce costs in light of the merger of Virgin and CYBG, with the enlarged bank saying last week that 500 full-time equivalent roles will go with the streamlining of structures and removal of duplication as part of the integration process.

This, the bank said, was in line with the 16 per cent reduction in headcount forecast when the £1.7 billion merger was announced in April 2018. In total, the integration will amount to the loss of more than 1,500 jobs across the board.

READ MORE: Glasgow bank withdraws fully from four Scottish towns

When it comes to branch closures, however, what is perceived to be the right thing for shareholders and the City may mean something altogether different for personal and business banking customers.

Indeed, with the Clydesdale name also set to be scrapped this year – a move which has left many customers both angered and puzzled – and Royal Bank of Scotland changing its parent group name to NatWest Group, one wonders how much customers are taken into account when these decisions are taken.

While banks such as Virgin, Royal Bank and Bank of Scotland regularly report increases in the number of customers who use their digital apps, cuts to branch networks are continuing to cause inconvenience for customers.

This is especially so for small business customers, including those operating in the tourism, hospitality and licensed trade, which continue to have high demand for cash handling services. With each branch that closes, there is generally a corresponding lengthening in the time it takes for a small business owner to make a round trip to their nearest branch.

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And this is not just a dilemma for businesses in rural areas. Colin Borland, director of devolved nations at the Federation of Small Businesses, told The Herald yesterday it would be a “mistake to think” it is simply a rural issue, noting that the effect of branch closures is acutely felt by members in town and city centres.

As well as making it more difficult to access services, the decline in branch numbers has brought with it a loss of access to good old-fashioned business advice and local knowledge. He recalls one bank manager being able to caution a business owner not to open an outlet in a particular area because he was aware of forthcoming traffic management changes, which would have had a dramatic effect on footfall to the location under consideration.

“A lot of our members remember the age of the Captain Mainwaring bank manager fondly,” was how Mr Borland put it.

There is no doubt that many people, including business owners, are taking advantage of the convenience digital banking offers. But there are things that digital apps will never be able to fully replace.

Banks should remember this time next time they are sharpening the axe.