Earlier this week (November 5th 2018), a study related to the disappearance of bank branches in Belgium has been published by the newspaper Le Soir.
Based on data collected by Guide-Epargne.be, the study highlighted the drastic reduction of bank branches since last three years. From 7079 agencies existing in 2015, only 5751 where still open end of 2018. A fall of 18%.
The study made various media headlines and Initio was asked by Brussels news channel BX1 to comment this evolution (the video is available here). The goal of this article is to go further in the analysis and to put facts and figures into perspective.
The trend is not new
The number of Bank branches in Belgium has been divided by 3 since 1993. Over the last 25 years, we come from 17.757 branches to 5.751.
10.000 agencies (half of the existing network) at this time) were closed over the period 1993-2010, and after a slowdown between 2010 and 2015 (-10%), the decline has accelerated again since then.
It’s obvious that banking digitization has play an important role in this evolution, but she’s far to be the unique driver.
Digital challengers are present in Belgium since the start of the century only (Deutsche Bank 1999, Keytrade 2002), and before the begin of iPhone era (2007) almost no one had heard anything about mobile banking.
The trend is European.
In Europe, one bank branch over 5 has closed his doors since 2007 and the decrease is far more important in countries like Deutschland, Denmark, Finland, United Kingdom or Netherlands.
If the fall is currently stronger in Belgium than European average (-32% vs. -22%), our country is still well positioned in terms of bank branches per inhabitant.
Belgian situation is not worse than neighbor countries
In Belgium there is one bank agency per 3367 inhabitants compared to 1 for 2278 in Europe.
If we compare this figure to neighbor countries, we can see that Belgium outperform Netherlands (1 per 10173), Deutschland (1/7980) and United Kingdom (1/6135).
Luxembourg do better (1/2600) but with 1 bank branch for 1780 inhabitant, France is far above our standards.
We esteem the French situation as exceptional and temporary; French banks cannot continue to afford such plethoric network. Société Générale, LCL and BNP have already made some announcement of important amount of branches closure to come and we believe that in the next 2 years, more significant network reorganization will occur.
The digital divide and banking exclusion are not a fatality.
There is an obvious correlation between digitization of the society and disappearance of branches network. With no surprises country with highest e-payment adoption rate by example are also those with the lowest ratio of bank per inhabitant (Scandinavia, Estonia, Netherlands…)
But it will be a wrong idea to conclude that a lower branches density number will automatically raise the risk of digital divide or banking exclusion.
A bank agency with extended business hours and multiple advisors (backed by digital tools or robo-advisors) will be ever more efficient and desirable than a closer branch but with single desk, open from 9 to 11 only.
Accessibility is more important than density, and in this sense rural environment are more at risk of banking exclusion than urban areas.
To counteract this risk, banks can develop(auto)Mobile agencies. Those agencies of a new kind can be simple mobile-ATM (like IdeaBank in Poland) or true full-service traveling agency (like Crédit Agricole in France). Such services are already common in Deutschland and UK.
Numerous basic banking services usually delegated to bank branches could also be outsourced to nontraditional point of sales like Tobacconist (example of Nickel), Supermarket (like C-Zam by Carrefour Banque) or post offices.
As we can see the risk of digital divide or banking exclusion are real for isolated population, less profitable clients and digital-reluctant users however, he remains avoidable. There are alternatives but it is likely that they will have to be supported or imposed by the legislature to persist.
About the author
Geoffrey Laloux, has 19 years’ experience in digital transformation. He worked mainly for European Institutions and for Telecoms or Medias companies before joining the Banking sector with Initio in 2015 as manager in charge of the Business Line Innovation and Digital Transformation.
 According to BCE
 Source EBF and Eurostat
 « Banques : une agence sur cinq fermée en trois ans » https://www.lesoir.be/188220/article/2018-11-05/banques-une-agence-sur-cinq-fermee-en-trois-ans