Era of internet sees 'big four' banks cash in by cutting back on Northern Ireland branches
Over the last five years Northern Ireland has seen the gradual decline of the number of banking outlets. Jamie Stinson takes a closer look at the changing face of the business here and the move from physical high street presence to online transactions
The economic crash in 2008 made financial institutions look at where they were spending money as they tried to cut costs. This has been coupled with a drop of the amount of footfall going through the doors at branches.
With the improvement, and accessibility, of high speed internet and the increasing number of households owning laptops and tablets, it is more and more being assumed that consumers do less of their banking in-branch.
Two weeks ago Ulster Bank announced it will close 10 of its 74 branches in February 2015, owing to changes in customer behaviour, with more using online services.
The closures were justified, the bank said, by the fact that only 14% of its customers' transactions are in-branch.
This month First Trust, which has 30 branches in its network, is closing two premises, due to fewer customers using services in branches.
Danske Bank, the second biggest bank in the province, closed three branches in September, taking its network down to 46 branches.
Santander, which took over building societies Abbey, Bradford and Bingley, and Alliance and Leicester in Northern Ireland, has 28 branches, three of which are based in universities.
Once all the announced branch closures have happened, Northern Ireland's "big four banks" will have closed 77 branches over the last four years, which works out at around a third of the network, the Consumer Council has warned.
Larry Broderick, general secretary of the IBOA (Irish Bank Officials' Association) finance union, has criticised the recent trend of branch closures.
"The impact of the financial crisis has undoubtedly been a contributory factor to this development as banks have attempted to repair their balance sheets as quickly as possible by reducing their overheads and their workforces," he said.
"We have a concern that this response - motivated by a short-term difficulty - may have longer term consequences that could create more problems for these financial institutions.
"But, of course, banking is no stranger to short-termism."
What has changed in a big way over the last five years has been the increasing number of people undertaking their banking transactions online.
By 2012 over 28m people in the UK were using online banking, a rise of 9.4m over the previous five years, according to the Payments Council.
However, this is a trend more widely seen throughout the rest of the UK, and does not show the whole picture in Northern Ireland.
In the region, there is lower internet accessibly than in mainland UK, with more than one in four not being able to get online.
Ofcom's 2014 Communication Market Report for Northern Ireland found 73% of households in the province have access to broadband, below the UK average of 77%.
When the telecoms regulator asked people in Northern Ireland what they used the internet for, just over one in two (51%) said they use it for their banking, lower than the UK figure of 57%.
Of those that said they use the internet for online banking, only 39% had done this within the last week, according to the 2014 figures.
What has become apparent is the growth in the number of households with tablets, such as iPads.
Northern Ireland has the highest rate of tablet ownership in the UK, along with Wales, according to Ofcom.
This part of the market has seen rapid growth.
While only 2% of households owned tablets in 2011 (the year after the first iPad was launched), by 2013 this had risen to 29%, and now almost one in two people (45%) in Northern Ireland own a tablet.
Mr Broderick disputed that the rise in mobile and online banking was the reason behind the increase in the rate of branch closures.
"The pretext for the accelerating the closure of branches has been the growth in the use of mobile and online devices," he said.
"The argument appears to be framed by some banks as essentially a choice between traditional banking in branches or the new varieties of electronic or remote banking."
Mr Broderick argues that many consumers have been pushed into accepting online banking.
"We believe these should be seen as genuinely complementary and available for each customer to use as and when they wish.
"But we have evidence -albeit anecdotal - that many customers have felt forced into adopting mobile technology because of the disappearance of their local branch or because reduced staffing levels have led to longer queues.
"Rather than simply following or reflecting the switch to mobile and internet banking, it appears that some institutions may now be actively driving it."
The relationship between a customer and their bank manager was always seen as one of the most trusted partnerships in the community.
Customers still want that face-to-face relationship with their bank, according to Mr Broderick.
"The only independent research available for the UK suggests that customers - even those considered to be younger IT-savvy consumers - would like to be able to meet bank staff face to face to discuss their financial affairs," he said.
In turn, banks will benefit from this face-to-face relationship as customers show a greater degree of loyalty, Mr Broderick added.
"From the banks' perspective, if you want to build lasting relationships with customers - especially younger customers who, you hope, will stay with you for the long haul, then personal contact with real people rather than virtual apps is likely to be far more effective," he said.
It has been warned the trend of bank branch closures could hit Northern Ireland harder than the rest of the UK, as a higher proportion of the population live in rural areas.
Rachael Cray, head of money affairs at the Consumer Council, said: "The Consumer Council believes there is a need for the NI Executive and the banking industry to consider a wider, more strategic approach to bank closures, rather than simply reacting to individual branch closures.
"We must consider how local communities, especially rural communities can be supported to access financial services and ensure large parts of Northern Ireland do not become 'financially forgotten'."
Another difference in Northern Ireland is the number of 'unbanked' people. This refers to those in the population who do not have bank accounts, and keep their money in cash.
This trend is perceived to be higher in Northern Ireland than in Great Britain. Dr Paul Stewart, lecturer in finance at Ulster Business School, said that Northern Ireland could be described as being characterised by a relatively larger rural population somewhat removed from denser populations centres and digital technology.
"Where there is significant socio-economic deprivation and a proportionately larger percentage of the population described as 'unbanked' - creating problems which may be exacerbated by branch closures," he said.
Older people are traditionally the group most badly impacted by branch closures.
Linda Robinson (below left), Age NI chief executive, said: "We understand that banking is changing, and that ultimately means we all have to adapt the way we take care of our day-to-day finances. We recognise this can be challenging for many people in later life."
The charity is working with one of the high street banks to help older people to new changes to banking.
"Age NI is working with Danske Bank on 'Step by Step', a project to support older people to feel more comfortable about new banking channels by guiding customers, step by step, through a variety of banking options, for instance ATMs and online banking," she said.
"We've also developed a joint guide bringing together vital information from banking to benefits that will assist older people."
In October, Lloyds Banking Group, which includes Lloyds, Halifax, and Bank of Scotland, announced it was closing 200 branches across the UK, but will open another 50.
It said, it will close branches in areas where there too many in close proximity, and open others in areas where there are none.
The banking group did state that it would leave no town without a branch, a promise which hasn't been made by banks in Northern Ireland.
To combat the change in consumer behaviour, Ulster Bank has launched its Bank on Wheels scheme in Carryduff and Saintfield. Ulster Bank's sister banks Natwest and Royal Bank of Scotland already use mobile banks to reach rural customers.
Whether this approach will be backed by consumers in Northern Ireland remains to be seen, but it is cheaper to run for the bank and is able to fill in gaps in the branch network.
Closure of your bank branch can be a stressful experience, so the Consumer Council has offered five helpful tips on what you should do if it happens to you:
1. Stay with your current bank, and ask to be moved to a different branch.
2. Register for online banking on your laptop, tablet, or phone.
3. Use telephone banking. You can contact your bank's call centres 24 hours a day, to check your balance, pay bills, arrange an overdraft, transfer money, and make transactions.
4. Use ATMs to check your balance or for mini-statements. Also many banks allow to access some of your banking facilities at the Post Office.
5. If a local branch is important to you, you are able to switch your current account to a different bank within seven days.