The move to a two-tier banking system, favouring wealthy account holders, came a step closer this week with Abbey National’s decision to close up to half of its customer counters.
One City analyst says: “Abbey National is sending out strong signals that it doesn’t wish people to use its branches. This could be a dangerous strategy.”
But Abbey National is not alone in its plans to move customers towards cheaper, no-frills, distribution channels such as telephone banking, automated machines or the Internet, while introducing charges for services at its retail branches.
The pressures are immense on the high-street banks from new direct banks, such as Prudential’s Egg and Standard Life Bank.
Many of the new banks are cherry-picking the most affluent customers with highly efficient direct operations which offer preferable terms and conditions.
The traditional players are in increasing danger of being left solely with the loss-making accounts, variously put at between 30 per cent and 70 per cent of customers.
NatWest has come under fire over its decision to charge customers &£10 a month for a “personalised relationship” with their bank manager, which had previously been available free.
Bank of Scotland will offer its customers free Internet access later this month, to encourage them to use its new Internet banking facility, which launches in September. It is also looking to set up a telephone bank in Europe.
Barclays, meanwhile, has just launched a new TV ad campaign to promote its Internet service and draw attention to its online banking operation.
Abbey National itself is spending &£150m improving its automated teller machine (ATM) network and expanding its telephone operation. The company is also considering launching an Internet bank.
Mark Finn, banking analyst at Williams de Broe, says: “Banks are in a difficult position, because phone and Net services are much cheaper, but retail branches are still popular with customers.”
An Abbey National spokesman insists the bank is not turning its back on its 787-chain network and says there will be no branch closures or redundancies.
But Malcolm Oliver, a financial services consultant and former marketing director for the life divisions of Barclays and Norwich Union, says: “If you shut down counters, what do you do with the remaining retail space? People are not going to travel to a branch which only has cash machines. They are going to want to use them at their convenience, for example, when they go shopping.
“High street space is not cheap and so we could see more branch closures. But they have to be careful because many customers still value retail banks,” adds Oliver.