In November 2018 the Financial Times reported that the UK has lost two thirds of its bank branches over the past thirty years. At the time the article was written there were 7586 branches. This compared with a total of 20,583 in 1988. While US bank branches have a different history from those in the UK, their numbers peaked at 99,544 in 2009 but since then have followed a similar pattern. According to Retail Banker International (18 October 2018) the number of bank branches had fallen to 88,062 by June 2018.

The logic behind these closures would appear clear given the costs associated with running a branch network, declining usage and the growing importance of digital and mobile alternatives. But this isn't the whole equation. Who do the closures effect and what is the overall impact of these closures on customer service provision?

There is no doubt that branch usage is declining. UK Finance has reported that branch visits declined from an average of 140 visits in 2012 to 104 in 2017. That's a 26 percent drop.

That said, the impact of closures on certain sectors can't be ignored. The House of Lords Financial Exclusion Committee stated that 'accelerating the trend for banks to focus on online services at the expense of their branch network is potentially excluding older people and others who lack access to the internet'.

In May 2017 the FT reported that 'a quarter of people aged over 50 would be forced to switch their accounts if their local branch disappeared '. In a Saga survey 21 percent said they relied on access to a local branch because they did not bank online and almost 31 percent said the next closest branch would be too far to visit'. According to Which more than one in five people live more than 3 kilometres from their nearest bank branch and one in ten have to travel more than 5 kilometres to the nearest bank branch.

In terms of access to financial services, it could be countered that UK customers now (since January 2017) have access to 11,500 post office branches but the range of services is limited and awareness is low at just 50 percent. Moreover, 42 percent are concerned about long queues and 32 percent believe there is a lack of privacy at the post office branches.

The personal experience is still important to bank customers old and young, whether it involves seeking financial advice or learning about new products. US research has found that those customers who had visited a branch in the past 90 days reported 5 percent higher levels of satisfaction and were 8 percent more likely to recommend their bank to others. The research, from Financial Brand in the US, found little appetite for digital-only banking. Rather than viewing an end to physical banking they concluded that 'a more likely scenario is that, similar to what we are seeing in other retail industries, physical banks will be reinvented and have more specific dedicated functions to service consumers in person'.

People's expectations of branch service delivery are changing. They no longer anticipate an imposing structure, large numbers of teller staff behind counters or long queues waiting to be served. They want efficient levels of service consistent with their experience using other retail banking channels and they expect a mix of self service, assisted service and personal interaction, dependent on the purpose of their visit. Not all customers are the same and not all locations are the same. The needs of a village location are far different from those of a city branch. All of which confirms there is no one size fits all branch solution.

An effective branch channel policy is not just about cost cutting. It is also about providing the correct numbers and configuration to best manage business opportunities.

As we've stated elsewhere, profitable retail banking is not just about efficiencies (though these are undoubtedly important) it's also about delivery via the right channel at the right time. It's about meeting consumer demand for seamless connected transacting and buying, delivering best quality service and maximising sales opportunities. Personal interaction is still important to customers, whether they are seeking financial advice or learning about new services. The evidence suggests that Generation X and Y customers may prefer to self-educate via the internet, but they still prefer to purchase products in the branch.

At Glory we see ourselves as an enabler of branch transformation and we are working with financial institutions worldwide to deliver the cost-effective branch network best suited to their customer needs.