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ISCOVER
Jessica Darnbrough
A forecast reduction in bank branch numbers could ultimately result in greater market share for the third party distribution channel.
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According to a report released by the Royal Bank of Scotland earlier this week, branch floor space has been earmarked for reductions of 30 per cent.
“We think this is the first step toward broader branch closures,” the report read.
“While we believe the banks are unlikely to consider a repeat of the mass branch closures of 1995-2002, we do expect the current plans to reduce floor space will lead to reductions in branch staff.
“Should wider branch closures ensue, we envisage the broker channel may play an even larger role in the mortgage market.”
The report’s findings were applauded by Mortgage Choice chief executive officer Michael Russell, who said branch closures could ultimately lead to brokers obtaining greater market share.
“If branches were to close or even if the floor space were to be reduced, I think it would become harder for borrowers to form strong relationships with bank staff, which opens the door for brokers to do more business,” he told The Adviser.
This isn’t the first time there has been rumours that the number of bank branches in Australia could be set to shrink.
Last month, JP Morgan released a report that said the number of branches in Australia could be set to shrink by up to 30 per cent as Australians increasingly look to complete all their transactions online or use a broker.
Currently, broker market share sits around 43 per cent, however the latest JP Morgan and Fujitsu report found that share could be set to eclipse 50 per cent over the short to medium term.
