Lloyds Banking Group is getting ready to cut thousands of jobs and close more branches as part of its digital revamp, leading to the automation of the entire business.
According to The Times, the group is set to announce the changes, expected to take three years, in their third quarter results at the end of the month. The government-backed lender hopes that cutting thousands of staff in areas that can be automated such as mortgage processing and new account opening will reduce costs.
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The paper quoted sources saying that chief executive Antonio Horta-Osorio believed that this move was essential to modernise the business and maintain cost advantages over rivals such as Barclays and Santander UK, both having made significant inroads to the digital channel. This is despite pledging in 2012 that the retail bank would keep all of its 2,900 branches open for at least three years.
Lloyds, which is still 25% owned by the UK taxpayer, is anticipating customers to manage their account online, rather than in branch or via telephone.
Lloyds declined to comment on the matter.
The cuts are unlikely to be on the same scale as those seen in the aftermath of the financial crisis which saw over 30,000 redundancies. Recently, Lloyds cut 1,080 jobs, and outsourced 310 more, as part of a revamp in January 2014. UK-based union UNITE, vehement opposition to Lloyds’ job cuts, believe that 35,000 jobs have been affected by the cuts at Lloyds since 2008.
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By GlobalDataThese cuts and reductions come just over a year after Lloyds ‘revitalised’ their brand with a network of 1,300 branches of Lloyds and TSB in England and Wales.
Lloyds are certainly not the only bank undergoing a round of cuts. Barclays announced in May of this year that they planned to cut 19,000 by 2016, with more than 9,000 in the UK set to be shifted. In the previous year, HSBC announced plans to slash 14,000 jobs by 2016 in an attempt to save between $2bn and $3bn.
This is another significant blow for branch-based banking in the UK. The biggest five British banks have cut 912 UK branches since 2007. Barclays announced in February that it was planning to close a quarter of its 1,600 branches in the UK. RBS also announced that it was closing 44 branches, 14 of which are the last bank in the community, a move that the bank pledged in 2010 not to undergo.
Anthony Thomson, the founder of branch focused Metro Bank, announced the creation of Atom Bank early in 2014, the UK’s first digital only bank. Thomson said: "Bank branch usage has fallen off a cliff. Telephony as a means of accessing bank accounts is in decline. All of the explosive growth is in digital generally and mobile in particular."
Speaking at a conference at Cass business school in 2014, Thomson said that if he were to create Metro Bank today it would be a digital only bank, suggesting he can envisage only limited success of the branch tied lender.
