The reaction of a Bank of Ireland shareholder or maybe someone whose pension fund has invested in the bank, to yesterday’s announcement that the bank is to close 103 branches will be different to someone trying to run a business in one of the towns about to lose its last bank. Once again, conventional community needs and market forces collide and the outcome is predictable. That yesterday’s announcement came after Ulster Bank revealed that it will quit Ireland to explore more profitable markets rubs salt into that wound too.
Investors will applaud Bank of Ireland’s pragmatism but the shopkeeper without a local bank will wonder how many more challenges this world will bring them, their employees, or their customers. Nobody can answer that question but one thing is certain. Ever-evolving technology will constantly change our world. Sometimes in ways that seem, at first, marginalising. That marginalisation, in swathes of rural Ireland and not so rural Ireland too, is amplified because far too many Irish people are unfortunately still at the get-to-know-you stages of their relationship with information technology. This, tragically, is another consequence of our utterly botched broadband rollout.
It might be unwise too to imagine yesterday’s announcement as the end of the process. More branches will close as technology makes a High Street presence a kind of expensive virtue signalling closer to marketing than banking. That process is under way in continental Europe where the number of bank branches has fallen by 21% in a decade. Spanish institutions set the pace, closing more than 18,000.
These closures will cut bank costs but there is no indication that these savings will bring even modest benefits to customers now obliged to be their own bank tellers. If there were, more competition in retail banking from such a windfall might be expected. The announcement that Bank of Ireland is forming a partnership with An Post to offer services at more than 900 locations deserves some cold-eyed scrutiny too. It is not overly sceptical to wonder who or what is being subsidised in this soften-the-blow arrangement.
The announcement also sharpens questions around an issue almost drowning in official silence. While in opposition the Minister for Public Expenditure and Reform Michael McGrath’s theme song was a constant challenge on the differences between Irish bank rates, especially mortgage rates, and continental rates. What has happened since he got the power to challenge this exploitation?
The further reduction in banking options makes the idea of doing business with a French or a German mortgage provider more and more attractive. After all, if a customer in a town without a local bank branch relies on a far-away computer server to pay a bill, it makes little difference whether that server is in Dublin or Dusseldorf.
Irish banks are privately owned and free to make decisions that best serve their interests. It is time those interests were balanced by Government efforts to make eurozone banking accessible to Irish consumers in a way that might make them, once again, feel like customers rather than captives.