Banks should vigorously defend their decisions to make changes to branch networks, the incoming president of the Institute of Bankers in Ireland, Mr Eugene Sheehy, has told his members. But it is not just branch closures that bank customers are concerned about. There is increasing dissatisfaction with the level of service provided and with what are seen by customers as arbitrary withdrawals of facilities and services. One recent example is a decision to stop cashing cheques not drawn on the branch where they are presented - this led to a bevy of complaints to the Consumers' Association and to this newspaper.
Banks should stoutly defend the changes they are making, if they can. But more important than defence are explanation, advance warning and concern to ensure customers are offered clear alternatives that suit their banking needs.
Mr Sheehy argued that banks had a strong case for making changes to branch networks but had not been successful in presenting their side of the argument.
Banks are commercial enterprises and the branch structure needs to change because branches need a critical mass of commercial and social activity to justify their existence, he argued.
Everyone knows that banking and the whole financial services industry are changing rapidly. New technology has made it possible to virtually bypass the bank branch while the traditional banks now have to vie for retail customers with non-bank competitors who have relatively low cost bases.
The trend internationally is towards smaller branches in areas of commercial/retail activity focused on selling products and services, with most routine services, such as withdrawals and lodgments and account enquiries, done electronically through ATMs, on the telephone or through the Internet.
Against this background the banks need to make changes in their branch structures and in services offered. But in making those changes it is important that they do not overlook the needs of significant numbers of customers who still want the personal touch.
Most people could accept that a changing population profile means that some bank branches are no longer in the right places and that new branches need to be opened and old ones closed. And the banks have invested heavily to put in place a range of alternative ways of banking, from ATMs to telephone and Internet banking.
Closing particular branches will not affect some customers but others will be badly affected. The banks have to make difficult decisions. But with highly profitable retail operations they have the space to take more care in how branch closures and other changes in bank services are introduced and implemented and to assess whether some of the changes are really necessary.
There is no point in trying to force customers away from paper and in-branch transactions towards electronic or telephone banking if the result is just disgruntled customers. It might be more appropriate to first generate customer interest in the new facilities and familiarise them with the advantages they offer. Arbitrarily removing and reducing facilities and services will not make the banks any new friends.
Like many other businesses, the banks face the dilemma of whose interests they should serve. Is their primary function to produce returns for shareholders? Or should their policies and actions take equal account of the interests of all the stakeholders - the shareholders, the employees and the customers?
In making that decision all businesses have to weigh up short and long-term considerations: cutting costs sharply may raise returns to shareholders in the short term, but if the cutbacks result in disgruntled customers and/or demotivated employees, the longer-term result could be a fall in returns to shareholders. It is always difficult to ensure the best balance between the interests of shareholders and those of all the stakeholders.
In the banks, customers are probably the weakest group of stakeholders. Employees can act together to fight against changes they consider disadvantage them.
It is much more difficult for widely dispersed customers to mount a protest. And the customers most discommoded by the branch closures and service changes are generally those least comfortable with the alternatives on offer from other suppliers.
Mr Sheehy is right. Banks need to be more forthright about the reasons for branch closures and changing facilities/ services to customers. But they also need to find a better balance between commercial concerns and the needs of significant numbers of their customers.
