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Why are banks and building societies clustered together?

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bruncher
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Why are banks and building societies clustered together?

#250546

Postby bruncher » September 9th, 2019, 4:23 pm

Does anyone understand why some towns don’t have a single bank or building society or credit union? Often High Street financial institutions are found near stations and estate agents. We have a very busy station and nine estate agents.

The Post Office is not accepting new applications for current accounts, so there really is no service available.

I understand that there is generally a move to cashless and online transactions, but why is it that when you find one bank, you find six nearby? For example the next town has a branch of all main banks and building societies, whereas we have not a single one.

AF62
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Re: Why are banks and building societies clustered together?

#250553

Postby AF62 » September 9th, 2019, 4:57 pm

bruncher wrote:The Post Office is not accepting new applications for current accounts


I didn't know that, and that is frankly quite incredible as it was being touted by the government as the fall back to the bank closures.

I am surprised that there are towns without a single bank, villages - yes, suburbs of towns - yes, but a town with no bank branches!

Anyway the answer to the question is likely a simple 'how many people and businesses make a bank branch profitable' - under that number and you will get none, over that number and everyone wants a piece of that pie so you have multiple bank branches.

bruncher
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Re: Why are banks and building societies clustered together?

#250565

Postby bruncher » September 9th, 2019, 5:24 pm

AF62 wrote:
bruncher wrote:The Post Office is not accepting new applications for current accounts


I didn't know that, and that is frankly quite incredible as it was being touted by the government as the fall back to the bank closures.

I am surprised that there are towns without a single bank, villages - yes, suburbs of towns - yes, but a town with no bank branches!

Anyway the answer to the question is likely a simple 'how many people and businesses make a bank branch profitable' - under that number and you will get none, over that number and everyone wants a piece of that pie so you have multiple bank branches.


I have looked more closely and the Post Office (Bank of Ireland) is closing all current accounts by 11th Sept!

There is a service called Everyday Banking which allows anyone who has an account with a participating bank to deposit cash and cheques. Nationwide (my bank) is not a participant so I suppose I should switch.

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Re: Why are banks and building societies clustered together?

#250574

Postby swill453 » September 9th, 2019, 5:37 pm

bruncher wrote:There is a service called Everyday Banking which allows anyone who has an account with a participating bank to deposit cash and cheques. Nationwide (my bank) is not a participant so I suppose I should switch.

Yes, I've always used that. I have no need for a branch of my bank*.

* - it doesn't have any anyway ;)

Scott.

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Re: Why are banks and building societies clustered together?

#250600

Postby TedSwippet » September 9th, 2019, 7:59 pm

bruncher wrote:...but why is it that when you find one bank, you find six nearby?

Hotelling's model of spatial competition?

https://ed.ted.com/lessons/why-do-compe ... ac-de-haan

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Re: Why are banks and building societies clustered together?

#252396

Postby bruncher » September 17th, 2019, 11:25 am

AF62 wrote:
bruncher wrote:The Post Office is not accepting new applications for current accounts


I didn't know that, and that is frankly quite incredible as it was being touted by the government as the fall back to the bank closures.



I wonder if this could be Brexit-related? The Post Office accounts are Bank of Ireland.

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Re: Why are banks and building societies clustered together?

#252399

Postby pochisoldi » September 17th, 2019, 12:03 pm

bruncher wrote:I wonder if this could be Brexit-related? The Post Office accounts are Bank of Ireland.


The BoI have a UK establishment - https://beta.companieshouse.gov.uk/company/BR000459 which is where the accounts were probably held.

If you want to point the finger, it's probably because the relationship didn't give BoI the return on investment they were looking for. (i.e. straight commercial decision).

(Edited after checking to see what the status was at Companies House)

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Re: Why are banks and building societies clustered together?

#252710

Postby brightncheerful » September 19th, 2019, 3:27 pm

Banks and building societies are private-sector businesses and not, contrary to popular belief, extensions to social services.

Branch profitability is not measured on any 'community value', but on financial yardsticks having regard to the profitability of the customers whose accounts are based at the branch. Where for example the bulk of the profit of a branch comes from one or a few large corporate customers nearby the branch will remain open for as long as is needed to service those customer(s).

As for clustering, that is largely a reflection of bank and building society expansion, including some building societies latching onto the proximity of other b/socs. For example, for years it was policy amongst one particular b/soc to open as close as possible to another particular b/soc and it was obvious that the second was following the first around.

It is also a reflection of local authority town planning use class policy. Banks and building societies are classified as A2 use under the Town and Country Planning (Use Classes) Order 1987. It can be easier for a bank and/or b/soc to get planning permission in some trading positions, rather than others, because the planners like to preserve some positions for ordinary shops.

If you look at the type of building that the banks occupy / occupied then likely you'll find a combination of fortress-style (aka 'hard frontage') prominent corner positions and key positions in parades of shops generally. Building societies have always been more down to earth, with full height glazed window frontages.

Under the 1987 Order, a post office is within Use Class A1.

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Re: Why are banks and building societies clustered together?

#252746

Postby bruncher » September 19th, 2019, 6:52 pm

brightncheerful wrote:Banks and building societies are private-sector businesses and not, contrary to popular belief, extensions to social services.

Branch profitability is not measured on any 'community value', but on financial yardsticks having regard to the profitability of the customers whose accounts are based at the branch.


All understood.

Interesting to note the list of Banks and Building Societies that use the Post Office to offer 'Everyday Banking'

https://www.postoffice.co.uk/everydaybanking

for their customers (deposits and withdrawals). How can it be profitable for RBS, Lloyds, HSBC and others to offer this, and not for Nationwide?

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Re: Why are banks and building societies clustered together?

#253281

Postby Infrasonic » September 23rd, 2019, 12:57 pm

There are plans afoot for different banks to share premises I'm told (by a branch employee of Natwest very recently). I queried why they didn't do this to save on costs (vis a vis branch closures), and it seems logic is finally prevailing.
I wasn't given any locations but I think they are trialling it very soon.

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Re: Why are banks and building societies clustered together?

#253394

Postby monabri » September 23rd, 2019, 6:44 pm

It's the same with Estate Agents... Maybe they feel safer and less vulnerable close together - safety in numbers? :lol:

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Re: Why are banks and building societies clustered together?

#253446

Postby UncleEbenezer » September 23rd, 2019, 10:31 pm

monabri wrote:It's the same with Estate Agents... Maybe they feel safer and less vulnerable close together - safety in numbers? :lol:

There was a sensible reason with estate agents: let househunters come to one place for all of them.

Now that one place is online, I expect it's just inertia.


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