Not to be confused with banking by mobile phone, which is in the ascendancy, the attempts by one bank to re-invent single brand mobile banks in England and Wales as a solution to the escalating withdrawal of bank branches from rural, suburban and inner city communities (750 already deserted) is potentially more harmful than helpful. The non-viability and unsustainability of single brand mobile banks in England has been conclusively proven and the energies of the industry need to be directed at modern solutions with universal potential such as shared branching, not seeking publicity and political ‘brownie points’for individual brands which is a distraction. Sharing, in small rural areas, can involve mobile banks and post office services.
History
After 40 years perseverance by HSBC (formerly Midland Bank) and 15 years by NatWest, multi-route mobile banking in England came to the end of the road in January 2005 with the closure of HSBC’s North Cornwall service.
The reasons are:
- the service is costly – operationally and capital required
- functionality is restricted and sales opportunities hard to realise
- usage had been falling substantially
- there is a security risk
but, most importantly, changes in banking behaviour had made the once or twice weekly visit of a bank van insufficient to attract and retain sufficient profitable business and personal accounts and realise the sale of profitable financial products.
Savings in staff and premises costs at redundant sub-branches were once a key component of the financial business case but have long since been exhausted.
Scotland v England Comparisons
In Scotland, specifically in the Highlands and Islands, Royal Bank and Bank of Scotland have operated mobile banks for decades. Currently RBS has 14 routes in Scotland and Bank of Scotland 7.
Unlike England, the distances from the remote rural locations serviced to the nearest alternative banking facility are generally significant, public transport sparser and adverse weather more frequent. Accordingly a higher percentage of businesses and individuals are loyal to the bank which visits and are prepared to arrange their banking needs around a very narrow window of opportunity. In the circumstances it is doubtful that many of the routes would stand up to financial performance scrutiny but losses are likely to be modest.
In short there is more banking competition south of the border and it is generally much closer, so the market share of the bank operating the mobile does not justify the investment, security risk and management time needed to sustain it; hence the decisions of NatWest in 1990 and HSBC in 2005 to abort.
The Portman Initiative
The Portman Building Society introduced a mobile banking service to South Devon in August 2001 but closed it just over a year later citing low usage.
Post Office
The Post Office has/is trialling a mobile service in Devon and Cumbria and possible further limited use is suggested in the current consultation over 2500 branch closures. Comparison with banks is not appropriate as the Post Office has a universal service obligation, its offering is available to all residents and operating savings from resultant branch closures are available to support the business case.
The RBS/NatWest Initiatives
These initiatives should be seen against the background of RBS’s established fleet of vehicles and operating systems to support the Scottish routes which allow the new services to be evaluated on a marginal cost basis and would enable their withdrawal to be achieved quickly with no material loss of capital investment as vehicles and staff could be redeployed.
The Cornwall route was introduced in direct response to the cessation of HSBC’s last service but with a lapse of 9 months. The van calls at 12 locations of which:
- 5 are unbanked (4 had been served by HSBC mobile)
- 7 have other banks ( 3 x 1bank; 3 x 2 banks; 1 x 3 banks)
Visits are typically 30-90 minutes once per week, only Looe (3 other banks) visited twice. Following the recent closure of the only bank in St Just, Lloyds TSB open 5 days a week, the NatWest mobile is to be diverted to make a short visit am Mondays.
The second route, in the South Wales valleys, commenced October 2006 and visits 12 locations, only 2 of which have existing banks. The deprived community of Ogmore Vale saw its Barclays close in 2000 and HSBC in 2005: the loss of 5 day competitive banking is not compensated for by a mobile of a third bank visiting for an hour a week. A second Welsh service has just commenced, surprisingly branded Royal Bank of Scotland, calling at 12 locations of which 4 have existing banks (including 2 NatWest), 2 have recently lost HSBC branches and 4 saw their NatWest branch close over 10 years ago due to insufficient usage.
Also under the Royal Bank of Scotland brand, February 2007 saw the commencement of a Yorkshire service visiting 12 locations of which 10 have other banks ranging from the bricks and mortar presence of one direct competitor to, in Selby, no less than six other banks. Astonishingly 6 of the locations visited have NatWest branches which can provide a full service to RBS customers.
A new service in Devon has a much higher and demanding call density with shorter availability periods. Of the 27 stops, 6 have existing banks, 6 lost their bricks and mortar Lloyds TSB branches very recently and a further 6 had seen their NatWest branches closed more than 10 years ago as usage was insufficient to sustain a presence. The route includes the only concession to inner city deprived areas: Devonport (in the worst 10% of such communities nationally) having lost its Barclays and NatWest branches is now offered a 45 minute mobile stop once a week which local sources say is in the wrong place to be of any use to the local community.
A new service in Cumbria is scheduled to visit 13 typically very small remote communities, 2 of which have existing banks and 7 had NatWest branches which closed over 10 years ago due to low usage: what has changed? Coniston, the tourist centre, gains a NatWest mobile visit for an hour on a Thursday but would much prefer a shared bank( useable by all) or the existing bank, Barclays, to be full hours rather than just Mondays, Wednesdays and Fridays. Meanwhile the next community of Hawkshead, which lost its only bank in 2000 and looks to Coniston , does not feature on the NatWest schedule.
Findings
The current mobile attack on England and Wales by RBS Group banks, the Royal Bank of Scotland and NatWest, comprises 6 routes and 90 communities, only one of which is inner city deprived. However 31 of these are served more generously by other banks’ established branches (9 duplicate a NatWest branch presence) and 27 (including 17 NatWest) have previously lost branches on grounds of low usage. It is this latter figure that should be seen in the context of 750 communities in England and Wales which have already lost their only bank branches, a figure destined to grow following last year’s abandonment of ‘keep open’ pledges for last banks.
The exercise looks therefore to be more motivated by opportunism for political recognition than a serious attempt to find a sustainable solution to the growing problems of banking access and could prove to be short lived as the RBS Group, unlike its principal competitors in England, has vehicle redeployment opportunities in Scotland to fall back on.
The historical evidence, from HSBC and NatWest, is that single brand mobile banking in England is unsustainable and past its ‘sell by’ date. Therefore, the current activity by the RBS Group should be seen as a distraction from the industry getting to grips with how transactional services can be provided cost-effectively to larger and larger communities losing individual bank presences.
CCBS believes that the answer lies in the flexible formats of neutral shared branching (including some modest mobile sharing) and seeks government support and industry co-operation to achieve meaningful pilots. |
