Bank on branches

By HELEN LOVELESS, MAIL ON SUNDAY ENTERPRISE EDITOR
Updated:

 

BANKING customers would far rather use local branches than bank online or by telephone, new research reveals.

A report by market analysts Datamonitor found that people still prefer the human touch when it comes to sorting out their finances, despite the growing range of internet banks and banking services available online.

It follows widespread branch closures over the last decade. Major banks including Barclays, HSBC, Lloyds TSB, Royal Bank of Scotland/NatWest and Halifax Bank of Scotland (HBoS) - known as the 'big five' - have shut down varying numbers of branches in a bid to keep costs down.

Last year alone 199 banks across the UK were closed, according to figures from the British Banking Association's (BBA).

This Is Money and the Financial Mail on Sunday have campaigned tirelessly against the closure of bank branches, with genuine success. In 2002 NatWest did a U-turn, and reopened a previously closed branch in Houghton Regis, Bedfordshire. And in June of last year NatWest reopened a branch in Bethnal Green after coming under fire in Financial Mail's long-running campaign to save High Street banks.

Datamonitor has warned that banks need to start focusing on local branches, rather than viewing them as a 'costly burden', if they want to keep existing customers and attract new business.

This is backed up by figures showing as many of 15% of customers opening a new account last year chose their account provider because they had a branch near to home or their workplace.

The report also revealed that 80% of people said they had initially approached their mortgage lender at a branch, with a further 57% arranging a personal loan with an adviser at their bank.

Despite banks such as Abbey setting up online brands - in this case Cahoot - the take-up of people using the internet or telephone to manage their money has been lower than expected.

Just 11% of people with a mortgage had arranged it by telephone and only 2% had done so online, this compares to 8% and 12% respectively for personal loan applications.

Andrew Birkett, author of the report and financial services analyst at Datamonitor said: 'Banks need to realise that most people want to do their banking at the branch. Consumers will always want the familiarity of face-to-face contact when paying their cheques in.

'Branch networks are a key strength in today's competitive market. Banks should be viewing their branch networks as their biggest asset,' he added.

However, one area where people are using the internet far more is when it comes to taking out a credit card. Although more than 50% initially went to their bank for a credit card, nearly a quarter switched cards within a year, often to internet banks or standalone credit card lenders, said Datamonitor.

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