The Business Beat
By Adam Hickman
The ridiculous outcry over the closure of three major bank branches on Bank Street serves to illustrate a point about how banks are changing and dispel some misconceptions about what their role should be.
But still some suggest closures have led to a decline of community streets.
The days are over where bank branches existed on every busy street corner to serve the public’s financial needs. There’s just no need for widespread service anymore. Banks are no longer anchors in large cities.
The reason is that banking service has changed — and for the better.
There are various ways to buy goods, many of which no longer require cash.
Bank or debit cards allow purchases to be deducted straight from people’s accounts. The same cards allow cash withdrawals from automated tellers worldwide.
Add the spread of credit purchases to the list and it further shows how our society is losing its need for cash.
Banks have also expanded service to allow customers to pay bills over the telephone and even over the Internet.
In the past, customers needed to see a teller to do something as simple as take out $50 for the weekend.
This isn’t so today and the overall effect of this service shift is that people aren’t required to make a trip to the bank branch to do all of their financial business.
As a result, there is no need to have a branch on every corner.
It’s preposterous to suggest that banks are becoming less service-oriented because a few bank branches have closed.
The expansion of more convenient ways to do banking far outweighs the loss of a full-service bank.
Because banks don’t have to handle the tasks that are now more automated, each branch can take on more customers.
The truth is that it has become inefficient to operate numerous branches in a small area. Branches which are redundant should be closed.
Maintaining money-losing branches only raises service charges and reduces banking hours. Bank branches will stay open where service is required.
It’s a red herring to blame the deterioration of Bank Street on the closure of bank branches. There were vacant store-fronts long before the banks closed. The problem is more complex. Bank closures are a more of a reflection of the deteriorating street, not the cause of Bank Street’s sagging fortune.