View from City Road: Banking statistics that don't add up
Thursday 04 November 1993
Contrast that with a survey by Andersen Consulting suggesting Britain will bear a quarter of the job and branch losses in Europe. Since others appear more overbanked, the damage does sound rather on the high side.
One possible explanation is that British banks and societies responding to the survey are more aware of the pace of technological change, and particularly the speed of introduction of telephone banking and cash machines.
This certainly fits the facts. British banks have been exposed to deregulation and competition for longer than their counterparts in most of Europe, where financial institutions may be in for a bigger shock than they expect. Indeed, Andersen says the question in the minds of many bankers is whether they are in a sunset industry like steel in the 1970s.
They should not, however, be allowed to overdo the pessimism. Predictions of the end of the branch as we know it in the UK - or anywhere else - should be treated with a touch of scepticism, and not simply because the accepted wisdom in banking is so often wrong. Branches are actually very useful for finding out about customers. There is evidence in the UK and Germany that bad debts rise in proportion to a business customer's physical distance from the branch. They are also a key outlet for insurance sales. There is a risk that closure programmes will go too far, as fashions invariably do in banking.
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