Closing bank branches seems to be the new concept being followed by Irish retail banks.
In the last week, plans have been announced to close 80 bank branches by various retail banks.
On Tuesday, AIB Bank (AIB) announced plans to close 15 bank branches in Dublin (6), Cork (6), Limerick (1), Galway (1) and Westmeath (1).
The bank said any accounts in these branches will be moved to neighbouring locations, on average 2.2km away.
The closures will be on a phased basis beginning in September 2021, with no compulsory redundancies.
Customers impacted do not need to take any action - AIB will contact them.
This move will leave AIB with 170 branches across the country, being repurposed to sell mortgages, pensions and investments rather than handle routine transactions.
Ulster Bank will close more than 60 of its 88 branch network and sell the rest to Permanent TSB (PTSB) as part of its plan to exit the Irish market. These closures will not happen until late next year.
Ulster Bank plans to sell 25 branches to PTSB as part of its non-binding memorandum of understanding being entered into currently. If this goes ahead, the remaining 63 Ulster bank branches will be closed.
PTSB is closing two branches in Galway and Cork, due to an overlap with the 25 branches it plans to buy from Ulster Bank.
Due to these actions, PTSB will increase its branch network from 76 to 99.
Bank of Ireland announced earlier this year its plans to close 88 branches across the country.
Are banks committed to the community?
AIB, PTSB and Bank of Ireland all state they are committed to maintaining a strong community presence and give various reasons for these planned closures.
Yet, it is difficult to see how banks can afford to maintain the remaining countrywide network of branches that are being seldom used by customers.
AIB has stated that its banking app is used more than 1.54m times a day compared with 35,000 (on average) branch visits per day. This figure was 50,000 per day in 2019.
Bank of Ireland has stated that its branch traffic has fallen by 50% since 2017 and is down by 60% at the 88 branches it has earmarked for closure, commencing September 2021.
The Government view
Minister of Finance Paschal Donohoe has stated: “The banking sector is in a state of flux and the recent announcements, including branch closures, give us cause to reflect on the sector’s structure and consider its future.”
He told the Dáil: “The increasing role of credit unions and An Post in the provision of banking services in the community must also be part of the conversation.”
Much of the shift towards online and digital banking is due mainly to Irish banks’ strategies to remove or rationalise counter and cash services, resulting in the low and decreasing footfall in bank branches. This is a trend that has been accelerated by the pandemic.
Vulnerable customers, in particular, will be inconvenienced by these branch closures and online banking, as a solution, will be a big challenge for them.
It is intended that communities losing a bank branch can use the local post office for basic cash services.
AIB, Bank of Ireland and Ulster Bank have agency agreements with An Post to provide personal and business customers with withdrawal and lodgement services via all the post offices nationwide.
The extremely low interest rate environment means Irish banks have a real need to drive down costs. Maintaining bank branches and staff salaries form a huge part of that.