The future of the traditional High Street bank is looking increasingly bleak, according to research by Deloitte Consulting. With the seeming acceptance of new banking technologies and marketing methods by consumers, it is predicted that as many as 3,600 of the 11,000 High Street outlets will disappear in the first five years of the millennium.
Deloitte’s Top Ten Outlooks for the retail banking industry suggests that the traditional branch will no longer be at the forefront of banking strategy. Over 50 percent of banking executives surveyed believe that call centres and the Internet will take a more crucial role in terms of strategy. The growth and success of 24-hour banking companies can be seen as a precursor to these moves.
John Harrison, a retail banking specialist at Deloitte said: “The level of investment at the eight major UK retail banks in the implementation of technologies enabling these new marketing channels has increased dramatically over the past decade, from the launch of First Direct, the first telephone bank, in 1989, to an anticipated investment of hundreds of millions of pounds among the major UK banking groups in 1999.”
It is believed that with many banks due to complete their Y2K work, funding will be available from IT budgets to implement the necessary technological changes needed to cope with the closure of High Street branches. The increasing use of the Internet and call centres by consumers means that they will be familiar with the technology and happy to use ATM machines.
Harrison says that branch closures should not be seen as a threat or weakness by customers. “It should be seen as an opportunity to serve and be served at a more reasonable price.” He believes the biggest challenge banks face will be how to deal with those who don’t have access to a phone or the Internet.
The Deloitte survey also looks at possible mega mergers in Europe, branding issues, the need for more customer-centric firms and the single European currency.
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