If your bank or credit union builds its brand around “being local,” then you need to think seriously about what will happen when you start closing branches. Because that day could be right around the corner.
“We care about here,” reads a new ad from Yorkshire Bank. “Here is where we live and work. And it’s where we’ve lived for over 150 years, supporting the communities, businesses and individuals around us.”
“We care because we’re close to you,” the ad continues. “Your home is our home. What affects you affects us, which is why we want to play our part in making where we live a better place.”
Sounds like a bank with roots firmly planted in local communities, doesn’t it? And yet no more than a few weeks after bank’s new ad campaign debuted, Yorkshire announced it would be closing a branch in the small town of Middleton, near Leeds.
News of the closure has rocked the community of 27,000, who will now be left without any bank branches. Customers needing to conduct in-person transactions will now have to travel a round trip of several miles to find the next nearest branch. This includes businesses, the elderly and the disabled, all of whom rely heavily on branches for their banking needs.
The erstwhile Yorkshire branch had served the Middleton community for over 50 years. It was situated a mere 16 miles from the bank’s birthplace in Halifax back in 1859. That’s literally close to the bank’s home, and metaphorically close to its heart.
Yorkshire’s branch network will now number 181.
Hypocritical Brand Campaign?
The timing of Yorkshire’s new ad campaign and branch closing feels horribly wrong. It feels disingenuous to say you’re “committed to local communities” on one hand while shuttering branches in said communities on the other.
Many customers are likely to wonder, “If Yorkshire Bank doesn’t care about people and branches in its own backyard, how can they claim to care about anyone? Who do they care about?”
Carmela Walsh, a customer of Yorkshire’s Middleton branch for 40 years, is one of those who’s irritated by the location’s closing… and the bank’s apparent hypocrisy.
“Yorkshire Bank claims it is looking out for the communities it serves,” gripes Walsh. “The reality is they couldn’t give a hoot. They just think of their profits first.”
Yorkshire can’t really deny Walsh’s accusations that the branch closing is motivated by self-interests. The bank say the lease on the branch location has run out, and the dwindling number of customers it serves make the economics of that location unfeasible. In other words, Walsh is right: They are just thinking about their profits — $35 million in the last six months.
According to The Daily Mail, banks in Britain where Yorkshire is based are closing branches down at a rate of one every 48 hours. And a report by the Campaign For Community Banking says that more than 1,200 towns and large villages in the UK have been left without a bank branch, and 900 have just one left.
Analysis & Takeaways
Small and even mid-sized financial institutions have spent years positioning themselves as servants of local communities. This may have made a lot of sense during the branch-building boom of yesteryear. No one ever stops in the middle of a bubble long enough to ponder the consequences should the trend reverse. Everyone just assumed that banks and credit unions would just keep adding one branch after another.
But the nature of branch networks are changing, and changing fast. Branch closings are an ever-increasing reality. Indeed 8.4% of banks and credit unions who participated in The Financial Brand’s annual survey said they had plans to close branches in the next 12-18 months. And it’s going to become the norm for more and more financial institutions.
This is going to force many banks and credit unions to reevaluate their brand positions. There are thousands of financial institutions who have built their entire reputation on “local” and “community” themes. They have canned food drives and sponsor little league teams. They bear taglines like “Keeping It Local” and “Serving The Community We Call Home.”
Key Question: How are these “community” financial institutions going to react when they realize they have to shut down branches that once served their communities? Without branches, how will banks and credit unions create as sense of “community” in the future? How can financial marketers position an institution as “local” when it has no physical presence? Can that be achieved simply through community events, charity and sponsorships? Or will there be a heightened role and need for social networks?