Some home truths about BoI bashing, banking and mortgages
Populist opinions based on forcing banks to keep their branch network open are codswallop
BANK of Ireland was predictably hammered over its plans to close 88 branches this week. And, yes, closing branches is a bad thing for consumers. But we need to have a realistic conversation about our relationship with financial institutions
If the only thing we hear from commentators is populist, illinformed bank bashing then we are never going to develop beyond a somewhat simplistic and immature relationship with them.
I could attack Bank of Ireland like everyone else has as a disgrace for letting down customers.
But there’s no point in being yet another journo, politico or commentator jumping on that particular bandwagon.
So I am going to take an opposite tack, give another side to the story and take down some of the criticism which seems to display a wilful naivity that does a disservice to bank customers.
Some of the criticism called on the Government ‘to do something’ by using its 15% stake in BoI to ‘make it’ keep branches open.
This is pure codswallop. A 15% stake gives the Government zero say in how BoI is run.
Others called on the Central Bank to step in. There are no regulations now banning or specifying how many branches a bank must have to offer a decent service to customers.
But at least one bank-basher suggested that as BoI was not going to shut its branches until the end of the year, there was plenty of time for the Central Bank to make up a new law.
This is never going to happen and everyone knows it.
The bottom line is: are we going to bring in laws requiring banks to have and keep open a certain number of branches?
If we had a conversation about how many branches banks should have, then Bank of Ireland would not come out of it too badly.
Even after shutting down 85 mainly one or two-person branches – Bank of Ireland is still keeping 169 large branches open.
That’s still over ten times more than KBC combined with all the new ‘digital banks’ that everyone seems to love so much.
While Bank of Ireland is lambasted for planning to have only ‘169’ branches post closures, we welcome digital banks who have hardly any or even none!
KBC gets loads of plaudits, and rightly so, for being competitive on mortgages. (While BoI has one of the highest variable rates).
But it doesn’t even have any branches. It has 12 of what it calls ‘hubs’ listed on its website.
It used to have 16 or 17 hubs. Last year it closed a quarter of them without a fraction of the fuss attracted by BoI’s move.
Even the ones that are still open have limited banking services. I tried to get money out of one once – and was told they don’t do cash and the easiest thing was to send it to my AIB account and take it out of that!
Revolut and N26 have no branches or even ‘hubs’. And neither will they ever give you any money over the counter.
They also need you to have a ‘proper bank’ account so they can piggyback on its services. Revolut has loads of gimmicks – includinng risky ones like offering Bitcoin investment – but it isn’t even a bank, can’t make money and is upping its charges.
N26 is the first bank here to start charging negative interest on ordinary savings and has a controversial industrial relations record.
If we are talking about forcing BoI to keep 254 branches open, wouldn’t it be unfair to allow competing banks to have hardly any branches, or none, while also refusing to dispense cash?
So are we going to force new ‘cool’ digital banks everyone thinks are
great to open hundreds of branches? I don’t think so. If we did, they would high-tail it out of here faster than you can zap cash to your mates on Revolut to split a restaurant bill!
And even if we did force banks to keep branches open or open a minimum level of branches, are we prepared to pay the extra banking costs to cover the costs?
The truth is, we don’t really want to go down that road.
The Central Bank said it expects ‘Bank of Ireland to provide affected vulnerable customers with the assistance necessary to ensure that those customers can retain full access to basic financial services, albeit in many cases at another branch location.’
This is hardly satisifactory for many older and rural customers so maybe this is where more nuanced debate about banking should be focused. If we can’t make banks open branches, perhaps we can make them provide better targeted supports for vulnerable customers.
We need to develop a bit of hard-nosed financial savvy if we are ever going to have an honest relationship with, or understanding of, the financial insitutions that play such an important role in our lives.
They are not social services like we seem to expect them to be. But nor are they downright
evil as some people seem to think. They are just businesses operating within the parameters that we as a society decide they should have.
And until we define those parameters we should stop talking nonsense about forcibly keeping branches open when we have no intention or capacity to go down that road.
Another great misconception about banking is the fuss some people make about bank charges as if banks should be expected to keep hundreds of branches open and staffed for free.
Yes, banks have to charge you for services. Even credit unions charge.
If you look at the table of banking costs, you’ll see bank charges vary from zero (with strings or few services attached) to around €96 per year at most, which some people would pay for a couple of shirts or blouses without really thinking about it.
So why do we get so worked up about bank charges when we should be focusing on mortgages.
Bank charges are a pittance compared to the €75,000 we fork out in extra mortgage payments to pricey mortgage providers (like Bank of Ireland, ironically) because the vast majority of people can’t be bothered to switch.
If you want cheap bank charges, EBS and KBC are best – but they also have fewer services and branches.
You could get the best of both worlds and bank with either of those two, or a credit union that doesn’t have charges, and get a second account with Revolut.