'Brick and mortar' banks becoming less cost viable


Tribune Business Reporter


Digital banking will drive a "natural" consolidation of commercial banks' branch networks, the Clearing Banks Association's (CBA) chairman warning that "brick and mortar" is becoming less viable.

Gowon Bowe, pictured, told Tribune Business: "Ultimately the cost of what I would call the 'brick and mortar' structure is becoming less feasible in the banking structure. What you are finding is the branch footprint is going to reduce, but not the services. What you will find is a large part of the larger branch networks was really the accommodation of very heavy foot traffic.

"As we move to more digitised activity, you would find that the foot traffic reduces and there will be a natural consolidation. I wouldn't call it a trauma or blunt blow to the industry; it was really more about the reaction to the cost, and decisions had to be made on the ability to afford 'brick and mortar' in some of the locations that would have had very little need for foot traffic and very little ability to recover those costs."

Mr Bowe acknowledged that commercial banks have pulled-out of several Family Islands in recent years, and said: "We are looking at how do we, in conjunction with the Central Bank, move towards a cashless society, and how do we - in the various islands - look at the expansion of the debit card and credit card activity, where persons are becoming more comfortable buying services and merchants are becoming more comfortable as well.

"That is an ongoing dialogue between the clearing banks and this working group that will hopefully provide viable alternatives in some of these locations. which will meet the need of customers and, at the same time, are not requiring unprofitable brick and mortar structures."