The small suburban bank branch’s days are numbered, that’s the conclusion of a report out last week by global property consultants DTZ, and future of work consultancy, Unwork.
The High Street, already under immense pressure from shopping malls, out of town supermarkets and the rapid rise of online retail business, will take another big hit in many locations if these large iconic traditional bank buildings are left idle.
Banks of the future will need to adapt their property requirements to the changing market, and that means moving to a “hub-and-spoke location model”. This is where only city-centre branches will offer full services, supported by a network of kiosks and pop-ups located for convenience, most likely in shopping malls and supermarkets.
Banks in future will be looking to technology, which is already enabling them to reduce their property foot-print as fewer bank customers ever visit a local branch.
The Credit Crunch of 2008 was a “wake-up call” to the banking industry which had in the highly profitable “boom times” to a large extent ignored the costs of property, salaries and large bonuses. Not any more: with increasing costs and competition, both for customers and employees, the major banks will need to adapt to the new challenges.
The report titled “The future of the financial workplace” says the banks need to change their property estates in terms of size, shape and location. I addition, they need to look to retaining their best staff, adopting new technology, changing geographic locations, and dealing with cost pressures and increased regulation.
With over 50 per cent of their employees now employed in technology and IT roles within the banks, expertise in IT and the rapid adoption of new tech systems are the driving force behind these changes, the report concludes.
DTZ has said the banks, no longer the employer of choice, are now competing with other large employers such as Google and Microsoft, companies that have grown and attracted the best staff by creating attractive working environments.
Some years ago many of the large iconic town centre branches were sold off by the big four and leased back on relatively short leases – 10 or 15 years in most cases.
It is easy to see how this story is unfolding; many of these bank tenants will likely walk away from the landlord’s premises at the end of their leases, leaving landlords with buildings with few alternative uses.
If this report’s conclusions were not convincing enough, here’s some recent evidence of the trend:
Early in 2014 Barclays announced thousands of job cuts with the closure of four branches and others moving into Asda supermarkets.
Barclays move came after Santander revealed it had shut 32 branches in the UK, and HSBC’s closure of more than 200 branches between 2010 and last year.
In November 2013, RBS said they had seen a 30% drop in branch transactions since 2010.
By Tom Entwistle
1 October 2014