HSBC closing more branches as customers turn to digital channel

HSBC is closing a further 82 branches as the Covid-19 pandemic reinforces its strategy to move customers to digital channels.

The bank said that even without the pandemic effect, 90% of all customer contact is now over the phone, internet or smartphone. It also said more than 100,000 customers a week interact with it on social media.

Jackie Uhi, HSBC UK’s head of network, said the pandemic has emphasised the need for the changes the bank is already making to its branch network.

“It hasn’t pushed us in a different direction, but reinforces the things that we were focusing on before and has crystallised our thinking,” said Uhi.

It is not just rural branches or those in quiet towns that are being cut – it includes branches on Edinburgh’s Princes Street, which will close in April, and High Holborn, London, which will close in August.

Uhi added: “This is a strategic direction that we need to take to have a branch network fit for the future.”

HSBC is introducing branches focused on cash as well as “pop-up” branches in some places.

Branch closures and increased digital services is a trend that has been increasing for years across the banking sector.

Last August, the Co-operative Bank announced the closure of 18 branches, citing customers shifting to online, with fewer transactions in branches, as one of the reasons for its decision.

The pandemic has accelerated the move to digital channels and traditional bank branch networks and staff will be impacted. Covid-19 lockdowns across the world, which saw bank branches closed and restrictions put on their activity when they reopened, have driven many consumers to digital banking services rather than using branches.

While contactless payments, mobile money management and mobile payments have increased in volume, banks have also offered face-to-face services via video link to customers who want human interaction when making financial decisions. The use of cash has also plummeted.

And it is not just on the high street where banks are reducing their physical presence, with reductions in office space a strategy that has accelerated for some during the pandemic.

For example, Dutch bank ABN Amro is selling its head office in Amsterdam and redesigning another facility to facilitate increased home working.

As part of its digital transformation, it is redeveloping locations in the Dutch capital into energy-efficient workplaces designed to facilitate the trend of remote working.

Covid-19 and the restrictions on movement it has brought has instigated a major rethink of future working methods at banks.

For example, early on in the pandemic, Barclays CEO Jes Staley said office blocks packed with staff, such as its own Canary Wharf building, might not be needed in the future. “The notion of putting 7,000 people in a building may be a thing of the past,” he said.

A few months later, however, Staley said Barclays wanted to get its people back into some offices, with “a major presence in places like Canary Wharf” kept on. He said the reaction to the coronavirus lockdown had been a learning curve for the bank and had helped it to understand how a “dynamic work environment” could operate.