Squaring the Circle

Why would JPMorgan Chase spend billions of dollars expanding its branch network while in the UK every retail bank is closing bank branches? Why would the Bank of Ireland invest heavily in new ATMs and refurbished branches while the UK looks at hubs and pods to serve their customers?

The UK brings in access to cash legislation. While there are clear signs of investment and action, the banks race to close branches at a frenetic pace. Is the criticism of the legislation as being too slow, too late and ineffective justified?

America

JPMorgan Chase has just announced that it will open 500 new branches over the next three years as part of a multi-billion dollar investment in its network. The scope of the investment is huge – renovating 1,700 existing branches, about a third of the total, and hiring an additional 3,500 staff by 2027.

JPMorgan Chase has added 650 bank branches, including 400 locations in 25 new states over the last five years. It already has one of the largest branch networks in the US, and the new markets it has said it is entering include low-to- moderate income and rural communities, as well as expanding in a range of major cities.

It feels like every other bank is doing the opposite. Why would JPMorgan Chase do this? Clearly it believes this is the best, most cost effective way to secure deposits, the bed rock of retail banking, and to earn fees from providing a full range of banking services.

The answer from the CEO of Chase Consumer Banking, Jennifer Roberts, is to reach people where they live. ‘Every day approximately 900,000 people walk into a Chase branch to cash a check, make a deposit or speak to one of our experts about an important financial decision that could impact their lives. This investment means we can continue to have branch locations that reflect the unique needs of the communities we aspire to serve today, tomorrow and for many years to come.’ It is expanding its community centre branches and hiring community managers to reach people who are under-banked or unbanked, particularly communities with larger Black, Hispanic and Latino populations.

Ireland

Is cash dying? Perhaps not. The Bank of Ireland has announced that it is to spend €60 million on its bank network. This will include installing new ATMs in every one of its branches in Ireland and refurbishing 18 of its 182 branches this year, with more to follow in 2025.

The 664 new ATMs will have greater cash processing capacity and will use less than half the energy of the old machines.

In addition, this new generation of ATM will be able to handle both cash withdrawals and lodgements, the majority will ‘recycle’ cash so cash deposited can be used for withdrawals. The investment also covers five years of servicing and maintenance.

But Britain going branchless (and less cash)

HSBC announced the closure of 114 bank branches in the UK from April 2023. In 2023 Barclays closed 180, Lloyds 85, NatWest 138 and Halifax 52. The Financial Times recorded that one in eight UK bank branches closed in 2023, demonstrating the decline of cash, and that almost three- fifths of the bank branch network has disappeared since 2015.

One UK newspaper counted the announcement of more than 180 bank branches being closed in 2024 by Lloyds, Halifax, Barclays, NatWest, Bank of Scotland, Ulster Bank and RBS. More announcements and details of those closures are now in the papers with headlines reading: 

• ‘TSB to shutter branches and cut jobs in cost saving exercise’

• ‘Barclays opens new year with plans for more branch closures’.

Although not bank branches closures, Asda, a major national supermarket in the UK, is to make 68 additional shops entirely card only in 2024 in addition to 14 that have already gone cashless. It has 300 shops in total. 82 of its fuel forecourts, a third of its total, will be card only by the end of the summer. 150 of its fuel forecourts are unmanned.

UK’s responses to less cash?

With so many branch closures, the government included provisions in the Financial Services and Markets Act 2023 so that cash access services, including cash deposits and withdrawals, are available, if not at bank branches, then at post offices and other governmental buildings.

The Financial Conduct Authority (FCA) has provided guidance to banks that intend to close a large number of branches, requiring them to include provisions to fill the access gap left by the closures. However, there is concern that several banks re not keeping up with guidelines.

An example of the action taken working is HSBC, which provides the last bank in Nailsea in North Somerset in the UK. It is planning to close this branch and has just installed a standalone ‘Cash Pod’. This is the first of ten that it is planning to introduce in towns with no bank branches.

These Cash Pods are essentially ATMs. They offer cash withdrawals and deposits. Customers can check their account balance, print mini statements, activate a card and reset the PIN, and make payments linked to their HSBC UK credit card.

In Andover, a town in Hampshire in the UK, Barclays bank is closing its branch and replacing it with a ‘Barclays Local’, a site where customers can meet Barclays staff for banking support as if in a branch.

Barclays Local are usually located in town halls, libraries, mobile vans and banking pods.

Final word

Perhaps an early warning that the steps to mitigate branch closures are not robust was the recent headline, ‘Lloyds closes mobile bank branch service’. Mobile bank services are meant to be one of the solutions when physical branches close but now Lloyds bank has announced it will end its mobile van service at the end of May.

The UK consumer may look to the US and to Ireland with envy. While the accountant’s calculator drives UK banking, the creative marketing vision offers a different future elsewhere.