HSBC had 1200 functioning units spread across the UK at the end of 2012, and its network of UK branches has drastically dwindled since. In March 2022, they announced the closure of 69 branches. The announcement on Wednesday will result in a total closure of more than 600 branches in the UK this year
HSBC, the British multinational bank and financial services company, is set to shut down 114 branches in the UK from April 2023, a decision fueled by the paradigm changes in consumer preference towards online banking. The bank is planning to cut off a quarter of the branches, leaving 327 functioning as it faces innate pressure from investors to cut costs.
HSBC had 1200 functioning units spread across the UK at the end of 2012, and its network of UK branches has drastically dwindled since. In March 2022, they announced the closure of 69 branches. The announcement on Wednesday will result in a total closure of more than 600 branches in the UK this year.
The bank said that more than 97% of transactions and applications for personal loans and credit cards occur digitally, justifying their decision. Some branches being axed cater to less than 250 customers in a week. The shift to online banking has led high street banks like Lloyds Banking Group, Natwest, and Barclays to close more than 5200 branches since 2015.
Lloyd has closed down more than 850 branches and has plans to close 70 more in 2023. Barclays has shrunk vastly, closing more than 960 branches. This shift in preference reflects an industry-wide retreat from expensive real estate portfolios, which might hold a longer-term impact, sprouting significant disadvantages to specific communities like the elderly people who rely on cash or low-income households using cash as a budgeting tool, especially during these trying times of the surged cost of living conditions prevailing in the economy.
Older people are generally not very tech-savvy, and this decision may also inconvenience those with little to no access to the internet. Small businesses relying on cash may also face significant disadvantages.
Dominic Hook, national officer at Unite, says that if no corporate social responsibility forces banks on the high street to cater to the elderly, disabled and vulnerable, then the access to cash and banking would probably be ‘lost forever.’
The managing director of HSBC UK, Jackie Uhidistribution, acknowledged the changing proclivity mentioning that the footfall is at an all-time low for the branches and they are not to return. Remote banking is becoming the new normal for the majority of customers. The use of the HSBC mobile app has tripled since 2017. However, she believes branches will keep on playing a significant role in day-to-day banking.
The bank is facing constant pressure from its biggest investor Ping An, the insurance company and China’s leading HMO provider, to boost performance and cut ongoing high costs.
The bank had also agreed to sell its Canadian business to the Royal Bank of Canada on Tuesday for a net sum of C$13.5 billion ($10 billion) in cash. The purchase reflects a 30% hike in the value attributable to the Canadian business. Through this deal, RBC gained the leading position in one of the most concentrated banking markets in the world. Ping Au had urged HSBC to split off its Asian business so as to boost shareholder returns.
HSBC aims to invest tens of millions of pounds sterlings into updating and working on the remaining branches of the network in the UK, including the provision of tablet devices and one-to-one coaching to selected customer groups, a post-closure strategy undertaken by the bank. It aims to invest in shared ‘banking hubs’ and other schemes to provide access to cash.
