Good morning and welcome to everyone to the 22nd meeting of the Economy, Jobs and Fair Work Committee for 2018. May I ask everyone to turn electrical devices to silent or off? The first item on the agenda is a decision by the committee to take items 4, 5 and 6 in private. Are we agreed on that? Thank you. Item 2 is a decision by the committee that consideration of a draft report on the impact of bank closures and the committee's approach to the publicly owned energy company inquiry and its work programme should be taken in private at future meetings. Are we all agreed on that? Yes. Thank you. Today we have, as our witnesses in our inquiry on the impact of bank closures, first of all Carol Anderson, who is the Scotland branch and business banking distribution director of TSB banks. Welcome to you. Good morning. Good morning. Gavin Opperman, who is the group director of customer banking for the Clydesdale bank. Good morning. Good morning. Susan Allen, head of customer interactions for Asante and Air. Welcome. Good morning. Simon Watson, who is managing director of personal banking for the Royal Bank of Scotland and Ulster Bank of Northern Ireland. Good morning. Finally, but not least, Robin Bulloch, who is managing director of Lloyds Bank and Bank of Scotland retail for the Lloyds Banking Group. Good morning to you as well. Good morning. I think that you are aware of why you are here and what the inquiry is about. I wanted to start with a question, which is the following. What co-ordination is there between banks when bank branch closures are being considered or being carried out? What considerations are given to the other banking provision in an area? To start with that, TSB is very much a local decision, so we'll look at what is available for our customers, how our customers are using our branches and what other access to banking there is in the local community. It is very much led by our customer behaviour, how and when they are using our branches, but also what are we going to leave behind if we do come out of that area. We would look at whether there was another bank present, whether there was a post office and we would also have a look at what the ATM facilities were like. Particularly free-to-use ATMs and whether they are available 24-7 inside or outside of buildings. We would also look at where the nearest branch was going to be and what the public transport would look like. Then we would reach out to anybody that we felt was vulnerable and help them with access to banking through doing either digital classes with them, where we can up-skill them on what's available there or how they can access their banking in a way that they need to to get cash if they're vulnerable in terms of they're a cash user. What co-ordination is there with other banks? If you look at what other branches are open or available, often what seems to happen is that one branch closes in a village or town and then all the others follow suit. I suppose that the key point of my question is what co-ordination is there between banks and is your answer to that none in the sense of you co-ordinating or discussing with other banks what banking provision and availability there will be. From a TSB perspective ours is a local decision based on our local branch and our local customers. Other panel members, is it equally the case that you would not co-ordinate in any way with other banks' branch closures? I think that, as Carol said, each of us would answer quite in a similar way in terms of how the decisions are made and the factors that we take into account. I think that Carol has summarised those really well. We do look at the provision of banking in the local geography and we would look at the other branches there. Our decision is not different depending on whether there are more or fewer other banks there. What we are looking at is what is the provision of banking services for that community. Often that is through the post office. In Santander we have had a really long relationship with the post office. Our customers put through about 20 per cent of their financial services transactions. It is a really important part of our provision and we work really closely with the local post offices to make sure that we have continued services for our customers. The decisions on which branches are closing are commercial decisions that the banks would take separately and independently, but each bank will be taking account of their own customers and how they continue to serve those customers in that community. Is your answer, you would try to co-ordinate with the post office but not necessarily with other banks? As Susan said, we look at all of the range of alternative banking provision within a given community, including whether there is a post office and the post office ability to serve those customers. You will find from the answers across all the banks that we look at as much as we possibly can in terms of what the provision is and any additional provision that we feel we might individually like to put in if a branch were to close. I would like to stress that our commercial arrangement is with the post office. The post office is one of the primary factors in establishing alternatives to the branch if we are choosing to close it. There are no discussions with competitors around the provision of services in a local area. Gavin Opperman, would that be the same for yourselves? Chair, we don't have an industry forum or forum where we get together and discuss branch closures. We as banks individually look at the commercials behind it. Second to that, we also firstly look at the customers and what is the alternative path for the customer and we would look at our own branch infrastructure to see which is a closer outlet to be able to service that customer base. That would be our first point. Secondly, as has already been said by the different writers, the fact that we would look at areas such as the post office, the ATMs and digital capabilities to support those customers. We will now come to questions from John Mason. Continuing the line that the convener was taking, it certainly appears that some branches are very busy. I had an RBS in my own constituency in Shettleston, which always had a queue in it, and it was closed. You hear that kind of story quite a lot. There does appear to be demand, but the banks are still closing branches. Can you explain that to me? Over the past five years, the demand for or the uses of branches has roughly halved, but the physical ways to bank, certainly with RBS, have tripled. The addition of the post office, the growth and the use in mobile banks, the role of the community banker, which we have introduced, which, even when a branch might close in the community, we leave somebody there that is able to serve the local community, is a way of offsetting that. Even though branch usage has almost halved, the ways to bank have tripled. It might appear that certain branches are very busy at certain points, but in aggregate, I do not think that we can ignore the overall trend that is now very obvious in that branch usage continues to fall. At a rate that probably outstripped even our largest expectations of what would happen in the last five years. Would you publish the figures for an individual branch so that, say, five years ago, 1,000 people used it in a week and now it is only 100? If people had that kind of figure, they would understand what was happening. Do you ever publish those figures? We publish the impact assessment of when individual branches close. Over time, the number of branches in Scotland, in any given market from all of the banks, has an impact on individual branch usage. Some branches' customers are referred to other branches and it is unfortunate that some of those will have closed. We have tried to give clarity now on the network that we have, and we have given a commitment to not review the branches in Scotland to 2020, and the usage of those branches that we are closing is all public and in the public domain. The actual footfall, if that is the word that you use? We measure all transactions that go through a branch for every customer, and whether that customer uses that branch or another branch. In terms of what we publish in line with other banks, we measure all the customer activity that goes in and out of that branch. Would any others like to comment on why busy branches are closing? We look very carefully at every decision before we make a decision to close a branch. I think that every one of us here would say that the decision to close a branch is taken seriously. We understand that it has an impact on the customers who use the branch, but we look carefully at all the different alternatives. When we look at branch usage over the past few years, as Simon said, we have seen footfall drop, but there is also a real distinction between the transactional activity and the advice, which we think is really important. A lot of customers, despite telephone banking and internet banking, want to come and speak to somebody for advice, which might be something that only happens a few times in a year over a few years, but we still want good quality face-to-face advice. We have taken the decision to make sure that branches remain a really important part of the way that we serve customers, but we are having slightly fewer branches, but more and larger branches that have brought together all the specialists that can support customers, whether they want to talk about life insurance or investments or their mortgages. Day-to-day transactions are declining, not just because of internet banking but also the use of debit cards. The report out this week said that debit cards are overtaking cash now in the UK. Debit card usage is easy for customers, so there are lots of technologies that have come in in the past few years that make life a lot easier for customers. That has impacted the sort of support that is needed in the branches. Most of our transactions, in fact, can be done really well through the post offices. We are providing support for transactions locally and then support for advice in some of the slightly larger branches as well as, of course, through telephone banking, video and available on the internet, so lots of different ways to support customers. Some of my colleagues will come on to post office in alternative ways of banking. I specifically wanted to focus. I mean, I've read some of your submissions. Are you all measuring footfall and usage of your branches in the same way? Or maybe you don't know how each other measure it, so that might be an unfair question. I mean, we got a little bit of confusion, I think, before, because the suggestion was that only customers of your bank would be counted using a branch. Whereas, for example, I would go in and pay money into a, well, Sintander was a previous one, where I paid money in for somebody who had an account with Sintander, but I didn't myself have an account with Sintander, so I don't know if that was counted or that wasn't counted. Is there a consistent way of counting footfall and usage and all these things? I wouldn't be able to comment on the other banks' approaches, but I would say for us, we count all of the transactions in the branch, so it would be all of the transactions over the branch counter. And just in Scotland, they've dropped 10 per cent a year on year, more materially, over a few years. So we look at every transaction, then we will also look at regular users just so that we can know who's, how often people are coming in and making sure that we've got the right services for them. Roughly, I would say about 50 per cent of customers who use a particular branch also use another branch. So we look at that as a metric. We also look at what proportion of customers also use other channels, and typically that's about 90 per cent in terms of ATM, post office, online or mobile. Can the others confirm that you do include every transaction that's happening and it's not just the customers in that branch? Is that the case? Everyone's confirming that. The other suggestion that's been made to us is that usage is falling 10 per cent a year whereas the branches appear to be falling by more than that. The chicken and the egg, is it because fewer customers are using branches and therefore you're closing branches, or is it because you want more customers to go on to the digital side and you're forcing that by closing branches? There are certain branches where footfall is declining more than that and there are other branches that are sustaining really good footfall. I think that we saw in Professor Greg's report with the large shopping centres a lot of customers when they're going to work or going to shop will use branches near those outlets and that is having an impact as well. Therefore we will invest in those branches where customers are choosing to use us more and they will travel to, and like Susan says, those customers will appear over several branches and will show that they transact in more than one branch. Are you saying that you would follow where the shops were? We'll follow where the customers are. We will be customer driven. Would you take into account the fact that a shop near a bank that closes will also close because it loses its customers? Again, I don't think that the bank comes out unless there is a wider economic thing going on in that high street. It doesn't tend to be the bank that's caused it, it's part of what is happening in that high street. Again, the same we would do with retail customers, we would look at what provisions are there and how we could help that business to do their banking again through some of the post offices or other alternative arrangements. Would you accept that at least some of our people who have come to this committee think that because the bank closes it is impacting very negatively on the whole town or the high street? I think that in some of the reports that is the opinion. I don't know if anyone else would like to comment on that point. I think that there is a wider and important context here. The way that the economy, the way people are behaving, the way that we are all doing things is changing so quickly. The banks collectively, but I see it as certainly from RBS, we have a responsibility to make sure that we are fit for purpose to serve the economies that we exist in and where our customers work. We talk about the high street and changes on the high street. There's a 40% reduction in the last five years in the number of cashier jobs available in Scotland and a 40% increase in the number of technology jobs and a 30% increase in van driver jobs. These are symptoms of the fact that people are using online and mobile as their primary means of doing things. Our job, as well as keeping pace with that, is to ensure that no one is left behind, which is why we look at what are the alternative and other ways of banking so that people can continue to meet their everyday banking needs if they choose to do it face-to-face in their local community. I think that there is a much bigger shift going on. I think that what you are seeing on the high street is a symptom of a bigger shift in the way that we are all doing things every day and that plays through into the way that the economy is shaping. I think that other colleagues will explore that further. Banking is very much a service industry. Many of our witnesses felt that the banks hadn't looked at enough alternative options around the branch closures. For example, downsizing branches, sharing premises with other banks, opening alternative days of the week. There was all sorts of proposals floated, but that doesn't seem to be happening. Why not? When we look at a branch, we look at the usage, we look at all the different alternatives available in that community, including things such as Link ATM and Post Office. For us, the Post Office is able to provide a really good service for our customers. We have worked with them for many years. The transactional banking can be done in the local community, which we see is very important. In some cases, when we have closed our branches, I know the closures this year, one branch has got a post office 66 feet away. We absolutely look at how close the post office is to the branch and can that provide that service to the customers? One thing that we know is very important is that customers know the people who come in. Often, our customers who come to our branches are regular customers. They build a real connection with the people that they meet every day when they come into the branch every week or every month. One of the things that we work really hard to do is to move our colleagues from the affected branch into another local branch so that the customers are friendly when they come in. We have managed to do this really well over the past few years in Scotland. Out of the closures that we have done since 2013, only three people have been displaced. That was because they wished to leave the organisation. We work hard to make sure that customers are friendly when they come to the other nearby Santander branch, but the banking can be done locally in the post office with minimal change. Is there any examples of alternative models or options being made use of? Is it just closure or not? I run 1,100 branches of Lloyds and Bank of Scotland. There are many different formats. For about half the branches, there are different opening hours depending on times of the day or days in the week. Part of our strategy is to try to make sure that we adapt our footprint to what we see as the demand from customers. A couple of examples of that would be bringing in mobile branches, where we recognise that we have closed branches. There invariably is post office provision. In fact, in Bank of Scotland, every branch that we have closed has had post office provision nearby, but we have brought in mobile branches. We have micro branches, which are largely automated, but there are colleagues there to help to support with the advice activity that we were talking about earlier. I think that we do flex our proposition according to the demand that we see. Mobile branches have been criticised because of the lack of accessibility, sometimes irregular timings in my constituency. I have seen mobile banks that were coming in for 30 minutes now coming in for 15. The time slots are very narrow. There are questions of security and so on. If you are a small business or someone trying to deposit cash and so forth, there are very much, in my opinion, second-class alternatives. Are there other options that have been tried? On mobile banks, the Royal Bank of Scotland has been serving communities with mobile banks for over 72 years. Many of them have never had a branch. It is something that our customers like. Some of the stops are for five minutes because we stop at the homes of individuals and we stop to meet with individual businesses. The entire timetable is built around us listening to what our customers want in parts of Scotland that would otherwise be hard to serve. That is one aspect of how banking has flexed over time and that is over many decades to ensure that we can serve Scotland. In addition to that, we have also added more bankers on the phone. We now have a team of senior personal bankers on the phone that can speak to you well outside of branch hours. We have video banking, a banker on a plane that serves three islands in the northern Isles. The breadth of provision and the flex that we have tried to introduce is there. I would also say that, even five years ago, the way in which you can do your everyday banking now, there are so many more options than was the case five years ago, excluding digital. If you want a physical service point, there are way, way more ways to do your banking in Scotland, certainly through Royal Bank than there was even a few years ago. The only bit that I would add is that we have a footprint in Scotland where over 25 per cent of my branches have flexible hours. We have tried to tailor what we offer to the customer. We have branches, for example, in Afford and Aboyne, which are both open half a week each so that we can remain in that community and serve the customers. We continue to look at that but, again, it is led by customer behaviour and demand. We will try our best to keep tailoring that provision. There doesn't seem to be a lot of innovation in closure of branches, but let me focus on one particular issue. Small businesses say that about 85 per cent of their transactions are in cash. They have a need to access banking services. In 2016, 44 per cent of the £15.4 billion consumer payments were made in cash. Small businesses, by the nature of their business, need to be able to deposit their cash. Post offices seem to be somewhat inadequate with regard to that, because there are all sorts of arrangements in advance that you have to make of its more than £2,000 and all that sort of thing. They have to travel quite a distance to deposit their money. I won't use the pocketful tail from the Royal Bank closing down on the aisles, because I think that the guy has about 15 hours or something to get to his bank to deposit cash. In my constituency, suddenly, customers and small businesses are having to travel to Musselborough and other branches that are roundabout. I am talking specifically in the Clydesdale, for example, where the Dalkeith branch closed. For a small business, there is maybe only you and somebody else running that retail shop. Somebody has to vanish for an hour to go into deposit cash. That is a long time, especially if they arrive at the branch and there is a queue. Anecdotally, that is what we are told happens. The shopkeeper is faced with security risks of holding more cash in his premises for longer periods and the risk, of course, of going to deposit that cash. How are you tackling that? Do you recognise that small businesses have 85 per cent of their transactions in cash? How are you accommodating those people, given the limitations of the post office? The Post Office has a long history of going back to Alliance and Leicester and the Gyro Bank. Our service for small businesses across the UK is that the cash is paid in at the Post Office. We have worked closely with the Post Office to deliver a really good service for our customers. Every post office is different, as every branch is different, so you will get some different experiences. By and large, we are very satisfied with the service provided to our customers. When we close a branch, there is absolutely no change for our small business customers because they have always paid in in the post offices. We have made arrangements for that to happen. I think we all agree that the last measure that the bank wants to do is close a branch. That goes without saying. Where it does come into play is when one looks at the customers that we have got within that branch that the branch services. That part of it is looking at the small business customers more specifically. There are alternative measures, as mentioned, of using the post office. You have got means like G4S that has introduced a new cash depositing capability. Cash is starting to take a different form where people will deposit their own cash in safes in their own premises. These are the kinds of innovation and the more innovative and creative ways that people are starting to deposit and use cash. I think that the most important part that we play in that is making sure that the training and the education and solving for the specific customer at the point. That is why we notify customers long in advance about closures. We get into discussions and on the small businesses we use our relationship managers to engage with the customers and have those quality discussions to see how to solve for it. If they are customer specific that have not been solved for, we encourage them to engage with them and we have a discussion to be able to solve for their cash depositing shortages that they are not experiencing. That sounds fine, but the evidence that we are receiving is that the banks are not responding to the needs of the small businesses. They are having difficulties. How can you alleviate that? At the core of this, cash is now in the minority. It is changing incredibly quickly. One of the things that we have done and tried to do with our business customers is two-fold. One, if there is a branch closure, it is never an easy decision but we give our business customers a named contact and we proactively call out to them to make sure that we leave them with an arrangement that suits them. We try to do that in every single circumstance and we try to ensure that that is absolutely cost-neutral for our business customers. There should not incur any more costs as a result of that. In terms of how we can support businesses to continue to be successful, my view is that a business owner wants to spend the majority of their time running their business, not running to and from a bank. We will try to work with them to find a way in which they can do that in the best way possible, including giving them access to free contactless terminals so that they can reduce their reliance on cash. We see that when businesses use less cash, their takings tend to go up in certain sectors. It is between 7 and 10 per cent uplift in their takings when they start to take contact lists. I think that there is a benefit to business as well in terms of us supporting them but we are very conscious and would not want to leave anyone in a situation where they cannot focus on what their primary goal is, which is to run their business well for their customers. If they go contactless, they get extra business. A lot of those businesses are in areas that are less wealthy. Clearly, that reflects in the volume of cash transactions that are going through and the difficulties that small businesses are having in dealing with that. 85 per cent is a huge figure in terms of a small business handling cash and there is this demand to safely deposit money. How are you responding to that? How are you supporting your consumer here? I have heard in the committees previously on assertion that cash is dead. It is absolutely not dead. It is perhaps dying and it might be dying slowly but I understand that you have a lot of representation from small businesses who use cash and I absolutely do not dispute the figure that you have come up with. I think that we do believe that the Post Office is a very good solution and one of our main competitors uses that as a cornerstone of their business proposition. The Post Office has 1,400 outlets across Scotland, arguably the biggest distribution of any supporter of organisations who need banking. The Post Office talks about the level of investment that it has made in the Post Office. As I said already, we have a commercial arrangement with the Post Office. There is an expectation that the Post Office will benefit from the arrangements that it has made with the banks and invest in their proposition. We provide mobile branches in a number of locations and wish to avoid repeating what has been said already. There are alternatives such as card lists and courier services. We talk to many businesses about using courier services and some of them find that very beneficial for the reasons that you stated about security, their ability to be in the business and not having to go to the local bank. We consider our branch closures very carefully, but those are the factors that we use to determine alternatives for businesses in the local area. We will need to move on now to questions from Jamie Halcro Johnston. We have heard over the period of this inquiry from a number of councils and community groups that offered space for banks where banks could operate, but they were not aware of any instances where that had been taken up. Security was one of the main reasons for that. I wonder whether you knew of any instances where that approach had been used as an alternative. If not, is it something that you may consider for your businesses? We are active in discussions at the moment and there are a number of discussions running about the use of premises. If I am interpreting your question correctly, could branches be repurposed for a different use in the community? No, I think that this is actually, as I say, councils and other groups providing a space for you to provide banking services within their communities. When we created the role of community banker, we work in partnership with local communities to find where that community banker can be best housed. That individual role may well be based in a library or in sheltered housing, for example, but we serve different customer groups. I think that there is evidence of us changing the banking model and to be able to provide services from different locations that might not be branches, for example. Would those services be more advice and guidance? They would not be banking services such as for small businesses or for consumers? That is right. It is predominantly guidance and support. I think that what we are looking at is actual providing, you know, deposit, cash, that kind of thing. Is that something that anybody has any kind of experiences of? I think that, chief, I might comment. 80 to 90 per cent of the transactions that we currently do through our branches can be done through the post office. The post office has got a greater reach. To expand that into a different network, we would rather be working as an industry with the UK finance to be able to see where we can strategically work closer with the post office to be able to close that gap even more than actually going and providing that. From advisory capacity and remote sites engagement, which is non-cash related, that continues. But when we talk specifically to cash, we still use the post office and the likes of which we expanded earlier on the G4S. I would agree with that. We have worked very closely with the post office, as I have already said, for a number of years. We have good ways of working with them. We have invested in technology. They have invested in technology to enable them to serve our customers well. That generally is where we would go in terms of providing something locally through the 11,500 post offices across the UK. When we make a difficult decision to close a branch, we give as much notice as possible to our customers, but we will also work with the post office locally. We have lots of examples of, in Lockerbie of the Post Mistress, Karen Cumming in and running some sessions in the branches, we will work with our customers, particularly our more vulnerable customers. Our branch staff will even walk with the customers to the post office to walk them through how to access the services there to make sure that they are comfortable. We work closely with the local post offices to make sure that the service there can be provided to the customers and to make sure that the customers are comfortable with the service that they will be able to access. That is our preferred route, as the Governor said. Every single branch that we have closed in the past five years is within walking distance of a post office. The next question that I had was around the idea of financial hubs. It is a point that has been raised by a number of people who have given evidence to this inquiry, where perhaps multiple banks could offer services, bringing them together. The suggestion that we are getting from you is that the post office provides that role. We have heard evidence from others that the post office cannot provide that because it can take too long to put cash in. We know that post offices can be unreliable in terms of hours. Obviously, there are issues in remote and rural areas of post offices being lost as well. Taking that into account, how would you answer those issues about whether the post office is really going to be a suitable alternative in a lot of locations? My understanding the question correctly, is this joint space for banks to be able to... That was something that came up, this idea of a financial hub where perhaps all the banks could utilise a shared facility. It sounds like your approach would be that we do not need that, that the post office is where you intend to provide services, local businesses and individuals can pay money and take money out. What I am then asking is how reliable would you say the post offices are to provide that service if they are not open as much as we are losing post offices in some areas. As I say, they do not have the security or the cash managing facilities that a bank would have. I have spoken with many post masters and I think that you are right in the sense that post offices are small businesses. A number of the post masters that I have spoken to are in one particular conversation where I was greeted with your customers and my customers and it gave the post office a real boost. It concentrates and strengthens the post office network to have it as a banking hub in a local community. If we were to try to do something separate to that, obviously that trade would not be going through the post office. In addition to making sure that our customers are well supported with any transition to using the post offices and continuing to raise awareness of what services are available through the post office, we also make sure that, if a branch is closing, we try to give the post office the right equipment to make that banking experience as smooth as possible for our customers. It is not a walk across the road and leave the relationship there. We work with the post office to make sure that they have the right infrastructure and the right setup to handle some of the everyday banking inquiries and support from our customers that they might well get in the months following a closure. A couple of observations. We have roughly 20 per cent of our customers, large banking group customers, now use the post office on a not infrequent basis. That has grown by 14 per cent in the last 12 months, so there is definitely a level of appeal. I endorse what has been said already, which is absolutely our view, which is that the post office is a suitable alternative. We are happy to work with the post office on signposting and promoting that service more, as well as enhancements to the proposition over time. You talked about the potential for post office closures. If we went down a different route to some sort of shared service arrangement, that could potentially have an impact on the post office relationship. I would imagine that the relationship that the banks have with the post office is very attractive to them. That would clearly be a spectre hanging over that relationship if we were to go down the shared services. Can I ask quickly the increase in use by your customers? Is that business customers or personal customers? That is in the round. Our business customers have had the relationship with the post office over the last 12 months. We have had the relationship with the post office for personal customers longer than that. I am afraid that I do not have the exact statistics to hand for business customers. I am happy to provide them to the committee. The growth in business customers will be greater because it is at the early stages of that proposition. We also had Lincoln and Link provide ATMs services. Is there any scope for, say, if there was a last bank in town for that bank to provide business banking services to customers out with their own customers, for example, for a fee almost along the link model for ATMs? Is that something that is available? Is that something that would be considered in terms of just straightforward business banking, cash deposits and the like? We do not do business banking deposits in our branches anyway, so that is all through the post office. I could not see us opening up for that. For those who do, would you take another bank's business deposits for a fee or would you only exclusively use your own business customers? If the customer deposited from another bank money through our bank, there would be a fee attached to it, but we would encourage that customer to open an account with ourselves because that is the route we would go. We would take that and we would encourage that relationship. When that bank did the closure, they probably accounted like we would. They would account for the fact that there would be a certain loss of customers because their bank was closing and the next book somebody might be inconvenient to a customer that might lose their relationship and they took into account that there was, in fact, another bank in town. Is that a fairly standard operation across banks that you will take deposits from other customers for a fee?  I am interested in focusing on the post office because some might say that the post office provides a public service and at the outset you talked about being private businesses or considering the particular economics when you close branches. Some might say that you should provide the service rather than the post office. Do you accept that there is a public duty on you as banks rather than simply being private enterprises? It is our responsibility to serve our customers well and we work very hard to look at the different ways that we can do that. The way that our customers choose to bank is changing. We have seen significant growth in internet and mobile banking. We take on about a thousand new mobile banking customers every day and many of them just want mobile banking. A lot of customers want to bank with us in different ways, but we still have to support all of our customers. We look at how we provide services through telephone, video, online, mobile and, indeed, through branches. We are investing in branches. One point that I would like to make is that, for all of us, branch banking remains an important part of how we serve our customers. For Santander's perspective, we have invested over the past few years some £13 million in refurbishing branches to provide those advice hubs to provide better services for customers. We see the branches as a very important part and we take very seriously our responsibility to our customers. You are underwritten by the financial services compensation scheme, which ultimately is the UK taxpayer, as we saw in the 2008 banking crisis. Do you accept that there is a responsibility beyond what perhaps a private enterprise might have that is not underwritten in that way? As a bank has been around over 100 years and customers that have supported the bank and communities that have supported us and we have supported, we definitely look at it from a bank perspective and say that there is a bigger and wider responsibility. That wider responsibility is not only for that geography, it is for the firmament on across Scotland. Yes, we do take it from a bank-wide perspective and say that there is a responsibility that is wider. That is why, when one does go through a closure, it is a very vigorous process that one goes through, because that is the responsibility that we take as a bank. The health of banks is dependent on and linked to the health of the communities and the economy that they serve. We make sure and we invest in everything that we can possibly look at to make sure that we are doing the best job for the immediate customers that we are serving and also for the wider communities that we serve. When we talk about branch closures, I fully appreciate that our colleagues serving in branches play a much bigger role than simply taking in and handing out cash. I think that that is something that people feel that they lose. One of the things that, as I said, we are very keen to continue to grow and invest is the idea of the community bank at the face of the bank in a local community that can do more than simply advise on your everyday banking but can help keep people safe, can advise on whether it is keeping people safe from scams, can be part of the local community discussion about what else is going on. I realise that banks play that role and that it is a very important role. It is certainly the case that we view our obligations and our responsibilities in the widest possible context. I think that I am just going to expand on that point. From our Lloyds banking group point of view, we have a stated commitment to help, rent and prosper. Some of the manifestations of that are commitments around lending to the mid-markets and SMEs, our commitment to first-time buyers. We will contribute over £100 million to our foundation over the next three years. We employ 13,500 people in Scotland, so we look at our obligation to society in the broadest possible way. My branches are a core part of our strategy. We have 155 locations across Scotland, and we will not be closing any in 2018. We are recruiting more to help with customer demand and be there when our customers need us most. Jackie Baillie All of you in advance of your appearance here today will ask to provide the committee with information on the number of bank branches that you had in 2010 and the number that you have now. I thank Santander and TSB for providing that information, but I am wondering in the case of all the other three where that information is and whether you can tell us just now how many bank branches you had in 2010, how many you have now and what percentage closure that represents. Starting in no particular order, because Robin Bullock is looking at me. He has drawn the short straw. We had a moratorium on branch closures for a number of years. I am happy to have this verified, but I believe that the number was 293 in 2010, and the number now is 206. That is a 30 per cent reduction in the number of branches. I think that that probably stands up to scrutiny reasonably well. We believe that we take a very measured and gradual approach to branch closures and have done over that time. I do not have the specific numbers, but to say that we had a similar sized network into Bank of Scotland and we are now at the point where we have just short of 100 branches in Scotland. That is quite a significant number. You are genuinely disappointed that you cannot provide that detail. My apologies for that in the request. Given that the committee asked for it in advance and you are quite senior in your organisation. I completely appreciate that and if I cannot get that during the hearing now I will make sure that I get that to you immediately afterwards. Excellent. Thank you. We had 150 branches in the beginning of 2010 and beginning of the year we have 71. That is about a 50 per cent reduction. Correct. I wonder whether I can focus in on RBS. Sorry to pick you out. Indeed, because I am going to do it anyway. You said that when a bank closes you want to leave something behind in the community. Let me just test that with you because you closed the branch in Alexandria in my constituency. I think that you closed. We were in dialogue. You said that you would consider a mobile banking branch. I think that more than a year later you were still considering it despite occasional prodding from myself. Then you decided that you weren't going to do that. During that period for a lot of the time the ATM wasn't working. What did you leave behind in Alexandria? I am aware of the individual circumstances of that. We made the commitment to put a mobile banking. My understanding is that we struggled to find a location to serve from. Without going into the specifics of that, that is my understanding of what happened at the time. In terms of the ATM provision, we have set standards that we attempt to meet and SLAs with the people that provide and look after our ATM. If we fall short in that occasion, I am very sorry. I am very happy to continue the discussion about Alexandria in the specifics. I do know that we made that commitment. I am aware that it was very difficult to deliver on it for a number of reasons. I am sorry if we didn't do it as fast as we should have done. In the majority of all the cases that I am aware of now, where we have been asked to look at additional provision or changing what is available to local communities, I think that we have managed to meet that. For example, in Juniper Green, where we were asked to respond with the addition of a mobile bank, I know that we have managed to put in instances like that. We are actively involved in many discussions and we always try to deliver on our promises and commitments. If we didn't in that case, I am very sorry. I can only assume that you have been misinformed because the excuse of not having a location was dealt with when I found the bank a location that they could go to free of charge. I will leave you to discuss that with your colleagues later on. Can I turn to Erica? Again, RBS was the last branch in town. You closed down, left nothing behind. The community are looking for an ATM. You have refused that too. Can you explain what your contribution is to Erica? Given that you talk about it would not be a closure and then nothing, it felt like a closure and then nothing in Erica? There are any number of different ways in which we can support a community once we leave, whether that is through a community banker, whether that is through working with Link, for example, and their financial inclusion fund in terms of getting a subsidised ATM, or whether it is the mobile bank. So, there are any number of options that we could look at. There are individual circumstances in some communities where it might take us longer to do that, but I am not aware of where there has been anything where we have not been able to provide some kind of suitable alternative, and I am very happy to take up the specific case of Erica with you separately or meet anybody from the local community that would want to talk to me directly. Excellent. We shall take you up on that offer. You can be assured of that. Can I turn to more general points for RBS? The UK Government, of course, all of us, owns 60 per cent of RBS, yet there is not a seat for the UK Government on the board. Can you explain that? The holding is with UKFI, so that is who we deal with as the shareholder of the organisation. The board structure is something that was agreed at the point at which the finances were injected into the bank, so I do not have any particular view on board structures of the Royal Bank. Have there been any discussions at any level in RBS with the UK Government or UKFI about bank branch closures? We talked to all of our shareholders, so obviously UKFI being our largest one, and all about the strategy of the bank and what we are doing. I think those discussions are constantly ongoing, so whether that is the individual private shareholders that we would have met in the last few weeks or with UKFI, so it was the same discussion that would happen with all of our shareholders. So they would have been aware of the programme of branch closures? UKFI would have been aware of the strategy of the bank. I am not aware of any specific discussions relating to branch closures with their shareholders because I do not have those direct discussions. The strategy would have outlined bank closures? No, the strategy would have outlined what the bank's plans and intentions were in the next few years to remain relevant, so I am not aware of any specific discussions on branch closures. Okay, but there was no objection made at any stage by UKFI to branch closures? I have not been in any discussions with UKFI or any of our shareholders on branch closures, so I would not be able to comment on that. Okay, perhaps you could find out if anybody in the organisation is, because I accept your saying that you have not personally been, but it would be interesting to know for the committee's purposes. I am very happy to come back to you on that. I think that it may well have been raised in another public forum as well with our CEOs in terms of that question, so I may well provide that answer as well. Fantastic, thank you. Finally, you have said that 10 of the 62 threatened branches will remain open until the end of 2018 at least, whilst you conduct independent research. Can you tell us the basis of the research? Who is going to be doing it? Will you share your methodology with us? I think that the committee would be interested in reflecting on that. There are 10 branches that are given for review. We have made the appointment of the independent reviewer. That is now with them to satisfy themselves that they are looking at everything that they need to do, and that will inform the final contract, and we should be in a position to announce the details of that in the coming days. We will await that with interest. Thank you very much, convener. Andy Wightman. To all of you who have come along this morning. According to the banking standard, you conduct an impact assessment on closures. The committee's inquiry is to examine the impact of bank branch closures in Scotland on local businesses, consumers and the Scottish economy. I note that I have one of those assessments here for RBS, whose branch in Llythgo is closing a week tomorrow. I notice incidentally that only one of the regional MSPs was consulted by the bank. The critical thing here is that it documents what steps have been taken by the bank to speak to their customers about the impact on customers. However, there is nothing really on the impact on the wider community or the local economy. Can you confirm that you do or do not do any analysis of the impact of the closure of a branch on the local economy? If I can explain the process that we undertake. We do a full review of the local area, which most definitely extends to all the Bank of Scotland representation in the local area. We look at bus routes between branches that we could potentially close and alternatives. We look at the provision of post office. As I said earlier, every branch closure that we have undertaken over the past four years has had a post office in close proximity. We look at the provision of ATMs, and we absolutely seek to understand how that microeconomy works. In terms of seeking to establish the impact after we have gone, it is about how our customers will be able to access their banking, both in terms of the ATMs post office, alternative Bank of Scotland branches, the number of customers who use online banking, the number of customers who use telephone banking, and we seek to ensure that they have adequate provision. Those are the areas that we look at primarily. I understand that, because that is in the impact analysis. That is looking at customers, not looking at the impact in the economy. We have had evidence that the loss of a bank branch can have a deleterious effect on other local businesses because people do not come there any more in the wider economy. That is not a criticism, but you do not do any analysis of that as such. It is certainly what we do. Often, when there is a closure, there is reinvestment. If we took a case of today, we are a bank of closing one of our branches in Edinburgh, but we built a flagship branch in Edinburgh. We have reinvested the money back into the community, but that reinvestment is put back into the block. I would not say that in specific geographies all the time, but that reinvestment is put back in. It is not as if it is a dividend that is distributed back to shareholders. It is reinvestment which is really to be able to support the communities. Often, we find that some of the premises that we are actually housing are no longer suitable for the bank. This is where the opportunity is. There is also a reinvestment back into the community. I think that it is fair to say that it is taking into consideration. The Shrug is a gamble to look at as an RBS branch in Llythgo, which is closing next week. There is no reinvestment in Llythgo, I do not think. Can I ask on the 10 branches that have been, or to remain open until the end of 2018, the research that you are doing, what is the focus of that research? Does it go beyond the steps that you would take in an impact assessment? We would look at additional circumstantial factors in and around those 10 branches. It is up to the independent reviewer to look at their own criteria as well over and above our decision making, on which they would then base their recommendation to keep or stick with the decisions that we made. Of the bank branches that have closed in the past few years, where you have been following the banking standard or protocol, do any of you have any branches where, following notification of intention to close, you have received representations for customers and have subsequently decided not to proceed with the closure? Are there any examples of that? One where we have delayed a closure for six months on the additional information that is provided in the engagement period, but no other branches have remained open. Any of the others? No. On the six months, was that just to deal with particular problems that customers were having? I am aware. I should be able to tell you. It was specific circumstances in local geography that meant it would support the local area temporarily if we delayed the closure of our branch. I am happy to advise the committee of the detail of that. That is just one for six months. Can I move on to the premises themselves? We have visited a number of towns across Scotland and had focus groups of people. We have received quite a bit of evidence that closed branches buildings are sitting there in the town or unused, maybe the ATM is still there. What, in general, is your policy relating to a closed bank building? If I can explain the process that we go through at RBS, which is to firstly try and ensure that we can as quickly as possible get that building into the hands of a new owner, and ideally somebody who is going to make a positive economic contribution to that community. That is the first goal. We also then open up the prospect of the community coming together, either through charity partners or social enterprises, to see if that branch could be turned into something else that has value to the local community. I appreciate that that is often very difficult to do, because bank branches are usually designed to be bank branches. We would not want to transfer the risk of adjusting that for a different purpose on to a group without a sustainable business plan. We also work with community groups to try and come up with a sustainable business plan. I would say that it has proven very difficult to do that, just because of the cost involved sometimes of altering bank branches. We try and accommodate and work wherever we can to make sure that that gets into the hands of the right owners. It is sometimes the case that bank branches remain empty for long periods of time, precisely because they are quite difficult buildings to change for alternative purposes. I would say that we are very conscious of the impact that an empty building has in a high street. We work on the buildings that we own. We work to try and get those into the hands of new owners as quickly as possible. Generally, it is within 12 months, which I know is still quite a period, but generally the owned buildings that we have exited have been occupied again within a 12-month period. Obviously, some of the buildings that we own are lease. It might be that there is a lease end, so that is really one for the lease holder. There is no involvement beyond us handing back the lease. In the interest of saving time, if you have policies in place on that, you can send them into the weekend. We have had a number of instances in Gorbridge where we have supported the local community by providing our branch for a temporary period. It has been over 12 months now. In Wigtown, we know that the right to buy scheme is being used and we are happy to support that. As Susan has already said, a number of our branches are leased, so we are returning them to the lease holder and the remaining branches that we have put up for sale. Of the branches that have closed, roughly speaking, what proportion are now either returned to lease holders or have been sold or are now occupied and being used for something else? I am afraid that I do not know that information. I am happy for it to be submitted to the committee, but I do not have that detail. A concern that we have had is that, in some instances, bank buildings are sitting there, as an eyesore for quite long periods of time. Presumably, those may be isolated incidents, but it would be useful to get a broader picture on that, particularly as we are talking about communities often who are suffering broader economic downturns, for which a closure of a bank branch is not exactly helping. There were reports in the media, a year or so ago, with RBS in particular, placing restrictions on sales of banks, including a restriction that it cannot be bought or used by another financial services. Body, are you familiar with those? I am not aware of that being in our current sales process. I recognise that I am happy to go away and confirm if there is any aspect of third-party agreements where that is the place, but I am not aware of that. Simon, you said that, in terms of bank closures, you work with the community to see whether there are alternative uses that could be made. Is that a systematic thing? You do that in every case? We offer that discussion up in every instance. To whom do you offer that? To whoever we might be engaging with. We have been approached by a number of groups, but we also, through our local directors, will take responsibility for managing the local closure programme. Our knowledge of what is going on in the local community, if we feel that there is either another business or if there is a community group that we should approach, then we try and be as proactive as possible in doing that. We do not want to lead the witness on that, but we make it clear that we are very open to any discussions and we will happily engage with any group to look at their plans and see if they can help. It is not systematic then, it is not a process that you cannot, for example, you do not have a list of every closure and what process has been followed to see what community interests might be. We have a common process for all closures, and as part of that process we ensure that we do engage with it and entertain and support any bids from the local community. You say support bids, but that is different from you being proactive about it. If no one comes forward, that is not necessarily evidence that there could not be a useful use of that building. I would agree with that. What I am saying is that our local directors are part of and are out in the local communities, along with the branch managers in the branches that are closing to ensure that we are trying to make it very clear that if there is anyone that is interested or would like a discussion, then we are very happy to do that. Okay, thank you. Gordon MacDonald. When you closed the RBS Ballerno, there was an approach and they were told that we need to make the full market price of it. There was not any leeway from the bank whatsoever. Ballerno was shut down a number of years ago, so I take what you have just said by a pinch of salt. The committee has received written evidence that by the end of this year, 368 branches will have closed since 2015 across Scotland. We are being told that mobile branches are part of the answer. Can you tell me how many mobile branch vehicles each of your organisations have based in Scotland? If you do not have any, why not? If it is a viable alternative? We have 21 mobile banks. They cover 8,000 miles a week, and they serve 440 individual community stops. We have a number of spares as well should one of those vehicles go off the road. 21 based in Scotland? That is correct. In the bank of Scotland, we had five. We now have 12. The five have been around for a long time. Our first mobile branch was introduced a year or two after I was born in 1963. We cover 108 different communities. The main service offering is each of those mobile branches. It is a location for between one and two hours on each occasion. It tends to visit between one and two times per week. Anybody else? We do not have any mobile branches. It is something that we have considered when we look at our closures. As we said earlier, we look at the closures and look at what alternatives we have for our customers nearby. It could be another Santander branch, it could be a post office. Typically, because of the distribution of the post offices, when we have closed branches, we have been fortunate that there has been a post office very close by. At this point in time, a better solution for our customers where that is available. If we were looking at new locations where a post office was not available, then an absolutely mobile branch would be something that we would consider along with other alternatives. As I say, fortunately, where we have chosen to close, we have either a Santander branch very close by or a post office. We think that that provides a good service for customers. Clyde South Bank constantly comes on to the agenda. We do not have any mobile branches in foreseeable in the next year because we have just had a look at it. We do not see it as an alternative. We are only closing two branches this year. If our customers, that is our customer demand and that is our customer, we will certainly continuously look at that. TSP, we do not have any. As I said earlier, we have no branch closure plan for 2018. 70 per cent of our customers live within two miles of our branches. At the moment, it is not something that we are considering, but that is not to say in the future if the situation is right. We would consider that. The rest of my questions are going to be focused on Robin and Simon about the mobile branch network. What criteria is used to decide where a mobile branch will stop and how frequently are those routes revised? We review the routes each month. At the moment, because there are branches closing, we have said that we are not planning any changes between now and the end of the year to let the current routes bed in, if you like, and allow customers to be used to using it and also for us to assess what the demand is. They are reviewed monthly. The criteria is very flexible. I was on our mobile bank which travels out of Ulipall. We stop at an individual small collection of houses, which is sheltered housing, and there are three customers that we serve there. That is to their front door, as well as a petrol station up the road, which is on the way between two stops. Depending on the route and our history in that local area, we try and accommodate as many customers as possible. We look at very specific customer needs, as well as looking at where their broader demand is. Where, for example, we best place a stop that might have been between two other stops where we have seen usage decline and that might happen to be a better stop. We take into account a number of factors, but we also take individual representations from customers. If we notice a customer that stops coming to a branch, for example, in a more rural area, it might be that we can offer to see if we can serve them in a different way. For those three customers, you referred to, how long would you actually stop at that location? It really only takes a few minutes for us to check they are okay and see if they have any banking needs on that day. It is literally a few minutes. It is not too long. Robin? I think our approach is different. We are endeavouring certainly with the new branches that our Equality Act compliant to provide a stable offering. We have a timetable, a set route and set times. They are one to two hours, as I said already, and we obviously endeavour to commit to that. They will be reviewed periodically, generally looking for feedback from consumers, from customers, where they feel that there is any shortcoming in our service offering. I think that, largely, our mindset is to try and solidify around the offering. We have no intentions to change it or change it dramatically. The provision of mobile branches has largely been in response to branch closures, whilst also accepting that we have post offices and close proximity to the branches that we have closed. I am aware of the recent introduction of mobile branches in my constituency in Ballerno, Currie and Juniper Green. Initially, RBS said no. The reason you have put them in is because Castle Community Bank offered to put a mobile branch in, but initially, for a year, you said you would not put them in. The stock for 30 minutes at a time, at each of the three locations, how many customers would you expect to serve in a 30 minute period, given that the Bank of Scotland stocked for between one and two hours at a particular spot? When I was there in the last couple of weeks, I think there were about 13 or 14 customers that had used a van on that particular day. In a half-hour period. In Juniper Green. Some of the customers may have more complicated needs than others. Some of them simply jump on and do a basic transaction. The van state, although it is a 30 minute slot, the mobile bank will stay there for as long as it is needed to make sure that we serve the customers. We have some flexibility in the timetable to allow for that. Obviously, any given week or month, there might be a different number of people that turn up. We keep a constant watch on that and to make sure that we are staying for the right period of time. If it is not long enough, if it feels too compressed, we might lengthen it. If numbers are not what we thought they would be, we might choose to decrease it or amalgamate some stops. The reason for asking is one of the correspondence that you had with Jeane Freeman in back in September 2017. You stated in a letter that where our service is consistently used by fewer than 10 customers, we will review the sustainability of the branch stop. I am not sure what transaction would take less than three minutes per customer in order to serve that individual. By the time they get on the van, deal with their inquiry or their transaction, whatever it happens to be, and get back off the vehicle again. How would you serve an individual in three minutes and are you setting up these three stops to fail? No, there is more than one person on the mobile bank, I would say. There is two, there is a driver and one person. No, but both will serve. When I was on the tune of the green last week, both were serving customers, some of the transactions did just take a couple of minutes. The mobile bank has been a provision and part of how Royal Bank of Scotland serves its customers for more than 72 years. The feedback from customers is that they like the fact that it is reliable, it is a way that is usually closer than their nearest banking alternative. The feedback is great. My colleagues who serve customers are good, so we do our very best to make sure that we can accommodate any change in demand. We also want to put mobile banks where they will have the highest value to the most number of people, but accepting that, sometimes we make accommodations for individual customers, as I said before. Moving on to the fleet itself, how many of the vehicles that you have have disabled access? In 2015, we reviewed the mobile banks that we ran. Our customers used to have tailgate lifts. Our customers told us that they did not like to use them. In response to that feedback, we tried to find different ways of serving customers. They were then removed. We have now got the option of something called MyHalo, which is a key fob for customers so that we can come to them, or from their home, for example. We do not have tailgate lifts on the vans, but we have spoken to all 89 of the customers that we have identified that might have restricted access to a van to check if we are meeting their needs in a way that is right for them. We have not had any negative response to that. I think that most people are happy with the way that it is. We feel that we have found a way of serving everybody and making the right accommodations for everyone. Are seven new mobile branches or a quality act compliant? The five existing ones are not currently, but they will be replaced over the next three years with new mobile branches and they will all be a quality act compliant. A question for RBS, Simon, is do you think that you actually contribute to a quality act of 2010 by not making reasonable adjustments to make your vehicle accessible? There will be people from time to time who will want to bank, who have not made that special arrangement with you when you were talking about the fobs, etc. The adjustments that we have made to service are right. We are looking at whether there is anything else that we could do over and above what is already there, but I do not have any further details on branch fleet design or anything at this point. We have spoken with the equality and human rights commission about this. We met with them very recently just to talk this through. Julian Martin. I would like to turn to access to banking standard. Access to banking standard, of course, was written by banks and you self-policed your compliance to it. Many of our witnesses over the period that we have been doing this inquiry said that the banks fall short of some of it. There was certainly a great deal of criticism that there was one element missing from that, and that is consultation prior to a decision to close. I would like to ask the question about consultation prior to making a decision with your customers and the communities that you have branches are. I will ask you individually if you do that. Under the access to banking standard, consultation is where, after we have made the decision, we have done the assessment, we have taken into account all the local factors, the access, et cetera, and then we go out and reach out to MSPs. With respect, I am aware of that. What I am asking is do you consult prior to making a decision with your customers and the communities that you serve? I would consider local factors. We would not hold a consultation, but we would have looked at local factors, we would look at customer behaviour, we would identify vulnerable customers that we were going to reach out to to ensure that they had access to banking. The bank is certainly, from a client-sell bank perspective, we are taking into account all the factors of the community in the surrounding. You do not consult with them? We would have discussions with certain groups to understand what the banking needs. We look at economic data and we look at data that would be able to point us to those consultations. We would have a good source of information that would be able to make an informed decision. You do contact some of your customers before you make a decision? We might take a sample of customers, it depends on the geography and the sample of customers, but we do not have a discussion with them, not in all cases. We do not do formal consultation with customers before any closures. We are fully adhered to the access to banking standards, as you would expect. The other thing that we take into account in making our decisions is representations from our own local teams. We do involve our local teams who speak to our customers every day and they will give us some sense of potential impacts on the community, which is absolutely factored into our decision making. I echo that. I think that we take into account as many possible factors as possible. I understand that with respect, but you do not reach out to your customers before you make a decision to do something. We look in detail at what our customers do, where they go, how they bank and what they are banking for. We do engage with our local teams in terms of getting their perspective on an individual branch and an individual community, but there is not a structured customer consultation. With your business clients, not even with the businesses and the local community that bank with you, you do not reach out to them. There is no structured customer consultation in terms of that discussion, but we look at what our customers do, where they bank and how they bank before we make a decision and engage the people who support our customers directly on a day-to-day basis before any decision is made. We do not consult formally, as has been said already. It is not a requirement of the standard. We do absolutely use local management to get their input into the thought processes that go into a branch closer. Some of the things that I am most concerned about are providing certainty to customers and also colleagues. I would be concerned with a pre-consultation creating a degree, quite a high degree of uncertainty for customers and colleagues to give them the possible outcome. Yet a decision made without consultation by the very nature provides a degree of uncertainty, given that you have spoken to us today and said that once decisions are made, I cannot remember which one of my colleagues it was in response to, I think it might have been Gordon MacDonald, that there are no instances where a decision has been overturned because of post-decision consultation. Your reputation, Royal Bank's reputation at the moment as a result of your decision to close many banks, many of them being the last bank in town, some of them being the last bank on an island, is massive. Would it not be the case that a pre-consultation prior to making a decision would be a good reputational exercise for banks and might stem some calls for the access to banking standard to be reviewed or the fact that you are self-policing to be reviewed as an option? The issue of consultation, I think we, when Professor Griggs gave evidence to this committee, was difficult to know where that would start and stop, so I think that there is a practical issue with that. But I also think that the approach we take to look at what customers are actually doing, how are they, how can we best support them and what alternatives are available is a sound basis on which we try and we try and take this, there's no one determining factor, we take in as many factors as we possibly can, so I think the way that we all go about it at the moment is obviously, as you've heard, very similar and as I say, I don't think it's very difficult to see how the consultation reaches a difficult or better decision. This morning, we've heard from Jackie Baillie two towns that have been left without the banking access that was promised, therefore I put to all of you that the access to banking standard has not been adhered to and is possibly not fit for purpose. Do you not run the risk that if you can't self place yourself that you're looking to a situation where steps might have to be taken that someone else, some other body, reviews the banking standard and places it? The lending standards board and certainly they've been into review are adherence to the access to banking standards this year, so we take it very seriously. We're also always looking for opportunities to improve. We've had some feedback on some of the language used in our impact assessments could be clearer, we'll take that on board in the last round of impact assessments we also made sure we gave higher focus to the post office and giving that information to our customers. We do take the feedback on board and I expect that we'll all continue to work to improve what we provide under the access to banking standards. Will you be taking the feedback from this inquiry to have said that the banking standards should have an obligation to consult pre-decision? As Susan said, we've had feedback from the lending standards board. I think we are learning all the time from the feedback that we get from multiple sources. This committee included from the lending standards board from our individual customers from elected representatives. So I think all of that we take into account to try and make sure that what is a very difficult decision for us becomes less difficult for everyone involved for our communities and customers when we're looking at it. So I fully accept any feedback or any input into how we can do things better from many sources. Once we've made the difficult decision to close the branch, we provide the information to our customers, we do all the things that the access to banking standard requires and one of the interesting things is talking to our customers on the ground for most of the customers. The biggest issue that they raise with us is what's going to happen to the branch staff. So there's a huge loyalty as you've already indicated that the branch staff are really important in the local community and that's why we work very hard to move those colleagues to other local branches where they are a friendly face for the customers when they come in to see them. Very important. Any of us take this lightly at all. I think that that's been clear today and it is very local and a lot of the hard work. Once we've made that decision and you could say that we haven't reversed it because the decision was made but the work that we undertake afterwards and engaging in that local community is immense. Both to make sure that partners are looked after and again we haven't had compulsory redundancies and partners have been able to welcome the customers in their nearest branch or help them with the post office. I think that we are committed to continue doing that. In a case where you have been found to fall short of the access to banking standard and again I come back to some of the examples that have been given by my colleagues today where I would say that that's been the case what recourse is there for the customer? What can they possibly do? Who could they go to if you're all self-pleasing to actually complain that they haven't been given access to banking and are required for the community's local needs? I'm particularly mindful of a situation in my constituency where we have a lot of farmers and farmers deal with checks a lot because they've asked sums of money where they've been to the market and they will be given a check at the end of the day but they don't have access to the facilities to cash that check and that's something that was not taken into consideration for example when banks are closing for example the Clydesdale bank closed in Mintlaw and me and a local councillor had to fight to get an ATM that wasn't taken into consideration when you closed that bank that took me and another elected representative to act on behalf of the community so I would say that some of the access to banking standards obligations are not been held so what recourse is there for a community when you fall short of that? I have to say we would never knowingly breach any of the access to banking standards and we expend a huge amount of effort with a specialist team to make sure that we have fulfilled all the obligations that we have made but any customer can complain to us that any customer can make representation to us and we will always consider that representation and for customers where we have closed branches we are more than happy to discuss with them all the alternatives that we believe are available to help support them whether they are personal or business customers we can certainly say that support is something that we as organisations as banks take incredibly seriously and we do hold ourselves accountable. Our representative boards hold us accountable as seniors and as executives of the bank that we do make sure that we adhere to that. If we as an organisation do fall short in an area in an isolated area we should be correcting that and we have more than just our moral compass to that we have the fact that we as an organisation have been supported by these communities for a long time so we certainly will and if we do have those cases I'm pleased that you did call out the issue of the ATM because if we if we do fall short we'd like to see how we can bridge that gap because these customers are equally important to us as a bank as that of the Constitution. I suppose what I was doing with that example is calling out where your post-decision consultation had not worked for that community and it took two elected individuals to make representation on behalf of that community so I guess I'm going to hand over to my colleagues now but I guess what I'm saying is if it's not effective in all cases that possibly your access to banking standards needs to be looked at again Do you agree with that proposition that it may need to be looked at again the access to banking standards? I think we see the access to banking standards as a baseline that we want to adhere to and that we welcome feedback as such today to help us to go back and review and consider. We also welcome feedback from the lending standards boards and I'm sure that over the next few years we'll continue to refine and improve based on the feedback from our customers and other stakeholders. I'll come to Kezia Dugdale. Thanks, convener. I think it's fair to say that as a public relations exercise the last few months haven't been particularly pretty for the banks when it comes to closures. I think that the media have overreacted the level of public anger whether that public anger is real. I think that we all understand that any branch closure has an impact and it can create challenges for many of our customers which I hope you've heard today we take very seriously and work really hard to try to mitigate that. I think that when we read whether it's a complaint from a customer or a representation in the media or through another stakeholder I wouldn't sit here and say that the media have overreacted I think that every complaint deserves to be taken seriously every impact deserves to be considered seriously and that's exactly what we do. Anybody else? In that view we take representation from any source very seriously not least the media and also politicians as well as our customers and we seek to learn from it. Would you also say that perhaps the programme of bank closures is now coming to an end that you've all collectively had a rationalisation of your branches and we're in the endgame phase here and if so what lessons have you learned from the whole experience what would you maybe not repeat if you had a chance to do this again? If I could comment on that we've made the commitment not to review any branches in Scotland until at least 2020. Now what I would say is previous to the round of closures that are currently that we're currently are out and proposed it was a very unfortunate set of circumstances where almost banks were trying to keep up with the pace of change and a branch would close a customer would be directed to another branch only to find out that in a period of time that branch is also closing so I think what we've tried to do is to give people certainty to give colleagues certainty to give customer certainty and give community certainty about where branches are but also what the alternatives the banking provision. So as I said before because branch uses is halved but the points of presence the places you can bank have tripled so that's a big adjustment for people to get to grips with because banking already feels very different and so I think there's a while that that's going to have to if you like bed in for a bit I think we're going to have to support and get used to the differences that are taking place technology most more branches earlier is that your reflection? No I think that there are I think it was really unfortunate that customers were put from one branch to a branch that later closed. I'm not quite sure I don't have the silver bullet answer to how that could have been done differently but I do appreciate the uncertainty and the pain that that did cause a number of customers and we would never wish to repeat that but I think you know certainly where we are now our view is that we are fixed until at least 2020 but the world is continuing to change at a very fast pace but we think that we've got we're striking the right balance of all the alternative ways to bank for people Can I ask your colleagues to comment on that I think it's important to hear from everybody as to whether or not you think you're at the end of your branch closure programmes Sir to your first question I think that the important parties are continuing at a faster rate and technology is changing even more rapidly and will continuously to double to that what it's doing at the moment and it's changing at a faster rate than the human being. So what can we do more of would be my answer and that would be saying talking to that of customer engagement in terms of education and helping to understand how technology can help and make life easier for us to be able to bank because banking is actually becoming simpler to many people and a lot easier and certainly the new generation is asking for that. There's a split between the generations of people Can I ask you specifically on the point about whether your bank is at the end of its closure programme Bank will never commit to that because customers' demand will dictate that Ask your colleagues the same question because I do have a few I want to get through here I want to hear from everybody are you at the end of your closure programmes For TSB we will continue to be led by customer behaviour, customer demand and we won't force or aggressively pace that change we will follow the customer change Absolutely we follow what our customers are doing and we look at the patterns of usage and what they demand from us and also the other areas that they want us to invest so we will continue to respond to what the information on our customers usage tells us Bank of Scotland customers are changing and we will continue to review our proposition for our customers in light of societal and consumer changes That's really helpful so we've had references to customer patterns technology change, societies changing which really takes us back to the changing nature of cash we've heard this week that people are more likely to use their debit cards than they are to use cash and we've also heard that there's going to be a programme of ATM closure so can you tell us about your plans to close ATMs across your banks there have been consequential ATM reductions on the back of branch closures we have 7% of the total ATM estate in Scotland within Bank of Scotland and we have no specific plans to close ATMs Are we not working on any plans to close ATMs either? No we do sometimes lose ATMs when a branch is closed but we'll always take care to make sure that there's a link free to use ATMs nearby or the post office and we're a very supportive link on the financial inclusion programme In fact the capability is being enhanced to what you can do through ATMs so we would encourage customers to be using more of the ATMs and that's why we've got things called DTMs which are post-taking where you can break your deposit you can do a lot more banking through that and that can be able to out of convenience of ours so it's a core capability part of the Omni Channel for the Bank Is that specifically an answer to say that you have no plans to close ATMs as customers demanding certain areas we'll build out ATMs and we'll do away with ATMs as they're required but we don't have immediate plans We have no plans in place for ATMs Thank you that's helpful because of course link do and they're predicting up to 300 free to access bank machines going from July onwards link have a rule in place that no one ATM can disappear if it's more than a kilometre from the neighbouring one Is that a rule that you could perhaps adopt now if you were to start closing ATMs so that you can learn some of the mistakes from the bank closure programme? We've made that commitment as part of our branch closure programme that if there is not a free to use cash machine within one kilometre if one is being removed as a result of a branch closure then we will make sure that one is left within that community so I think we've been clear on that commitment and we are part of the link scheme We are members of Link and we support the principles that have been proposed Okay and from the final two Any of our branch closures in all of them there has been a free to use ATM available to the customers That's me, convener Thank you Fulton MacGregor Good morning panel Some of the people we've had in front of us giving evidence and people that come and speak to us as MSPs just don't trust digital technology which is where I feel that the closures are coming from What are you doing to alleviate those concerns for consumers? It's a huge amount that we can do about education First of all digital technology is not for everybody and we have to acknowledge and understand that and provide services in different ways which we do but there is a role for us to educate and help people to feel comfortable how to use digital safely so as an example we've run some scam avoiding schools across the UK which are talking not just about banking digitally but use of digital more generally and in just in recent months we've had over a thousand people customers and non-customers from across Scotland attend 94 of those events and we think that's a really important role we can play in helping to educate but safe use of digital more generally as well as educating customers on the services that are available so for any of our customers they can come into any of our branches and sit down and work with them on a one to one basis to help them to spend as much time as they need to get comfortable with using digital if that's something that they're keen to do Imdils? We made a commitment to have a technical expert trained in every branch we've also the community bankers 69 different markets are also qualified as technical experts and we've made a commitment to train and work support 1 million customers at a bank-wide level in friends against scams as well just to build people's confidence in using the technology but keeping themselves safe and secure at the same time it is a really important issue we've heard about the pace of change so absolutely we take very seriously the need to ensure that people are confident and capable in how they're using that technology so that we try and break down some of the appeared barriers to people taking advantage of it Im glad you brought up the community banker I made the community banker that's now in place the steps area which is one of the banks to close actually tomorrow it closes at store and I was very impressed I have to say that she's very keen to help but what strikes me is why did the community banker not be put in place before bank closures if that's how you feel it's going that people are needing to move to digital services but you accept I think that everybody's accepted that there's a large proportion of the population that aren't ready to do that for a number of different reasons that have already been discussed why would it not make more sense to put those people in place way before any bank closure rather than now a very capable and energetic community banker coming in a few days before closure in some cases the community bankers were in place before closures not in all and sometimes that was just us finding the right person to do that role so I would accept that earlier is definitely better one of the reasons that we go give six months notice rather than just three is to give it a longer period of time so that we can get everything in place including the community banker where that's the right role for us in that area except that sooner is definitely better than later as Andy, you also got any services like that at community banking as part of our helping Britain prosper commitment we've got 20,000 colleagues we call them digital champions but their skill took quite a high level around using our online banking and we we have an aim to support 2 million people in the UK with digital skills elements of that are about protecting them from scamming and information that banks will never ask for and just making sure they understand that so we've got 1.8 million still to do with the 2 million over the next three years what we call digital wizards in all our branches and if it was a branch that was closing months before we do digital classes with customers to help them we have wifi and iPads in all the branches we follow the take five fraud awareness so we're out in local community supporting that and our partners do a fantastic job working with vulnerable customers to help them with that similar to the other banks with the addition that we also have the telephone banking post the closures post any change even a normal customer that migrates can pick up the phone and get some help there's uncertainty in terms of security they can find in at any time but telephone banking we're going to be introducing this year what we call voice biometrics which is basically people using their own voice and I think that will ease the access to telephone banking for a lot of customers over time okay so would there not have been a possibility for many of the banks the buildings that are left for instance the steps one that I've already mentioned would it not have been possible for consideration to be given for that being a service hub for some of these services that you're talking about because it seems that there still would be a need there and then you would almost have a transition so you would go from a decision that a bank would close because a customer footfall which I don't necessarily agree with because any branch that I've been in that's been closing is always at a high footfall then you would move into a second phase which would be how often would that building be used for those services that you've discussed and then at that point if the community weren't actually using it for those services or had moved on to another form of banking then you would have a you'd have a means to say well actually this has justified closure it just seems to be in some communities banks there closed gone that's what it seems to me It's disappointing to hear that customers feel the experience that today we hear tomorrow we're gone in a bank closure and why I say that is because there's a number of not only the education that goes and alternative channels that are offered but also there's that early stage notification that the customers are all notified while in advance and if we as a bank are not doing that adequately and we're not communicating sufficiently then it's a lesson to be learnt and to make sure so yes there is a bit of a migration process but as human beings often sort of leave it till the last minute and don't believe it until reality comes and maybe that's something that we could learn from and do better so I take that as feedback but having said that we do notify customers while in advance and we have our relationship managers on the ground specifically with our small business and our medium business customers in engaging with them and then as they come into the branch posters are put up and there's a notification so it shouldn't feel that I don't think there's any issue with their communication I think that this is about it goes back to earlier points that colleagues raised it's about what the community can do about that because I think that all of you have said apart from one example I heard that once a decision is made I've went through so the communication is fine I think that I've known about the steps closure for some time in other ones as well but it's then the community feels stuck in what they can do in terms of representation but I'm happy to leave it there convener Dean Lockhart I'd like to come back to the idea that a post office can act as a direct replacement to a bank which has closed we've heard in other evidence that there are limitations to what a post office can deliver sometimes it's in a busy shop sometimes the staff are not fully trained they don't offer mortgages and loans so can I ask each bank what level of investment and other steps are you taking to upscale the post office network and make sure that in many cases they can act as a direct replacement to a bank that has closed I think that as I said earlier not only are we working with post office teams in terms of understanding who the customers might be on an individual branch by branch basis but we're also supporting them with additional equipment so that the banking experience becomes one that's maybe more familiar or smoother for a number of customers and over above that on the point about guidance we're also now working with specific post office teams to train them again in the friends against scams so that our customers are getting the right information about keeping themselves safe and secure as well as all of the basic everyday banking needs that we would aim to meet so that's what we're doing in addition to the minimum contract so we're working very closely with the local post offices so as soon as any announcement of a closure we'll work with the local post office in terms of services and look at what our customers need and whether that post office is in a position to provide that support I do think and some of our branch teams do this exceptionally well to do more to work with the post office in terms of training and upskilling and we certainly see that as something that we can do more over the coming period but I've got lots of great examples in Nalithgo and Lockerby of the local post masters coming into the branches working with our branch team so that when we're actually talking to customers about the changes we're showing up as a united team and making that transition hopefully as seamless as possible for our customers but I think I would acknowledge that we can continue to do more So comprehensive plan that is drawn up with UK Finance and as we continue to be able to renew and work on that there's a journey still to be gone but we've got to acknowledge to this certain capabilities that the post office certainly will not provide and that is where the bank will fall that and hence to the point of mortgages we have mortgages that vises the doubt on the road we will save the telephone banking we have those capabilities over and above the digital where people don't feel digitally and don't have coverage in terms of 3G or Wi-Fi coverage in certain geography because that is a challenge that we are also facing so we have to have phone banking and so forth to be able to substitute that I think that post offices support ourselves and the customers very well and there are a trusted outlet in the local communities which is great to have I think there is still more we can do with our customers and the post offices to help that relationship when branches are pulling out with regard to the advice we are still investing in branches and with 70 per cent of the customers living within two miles of our branches we can provide that face to face advice when they need it as well which we're committed to doing I would be working with the other banks and also with the Treasury around promoting the post office service more so more literature, more education in branch as the others have said already at a local level the local teams work with the local post office on making sure they are in a position to take over the customers and as far as the advice related products such as mortgages and some of the other core banking then we continue to have the largest branch network in Scotland and we believe we will continue to have that for some time possibly forever and actually over and above that the ability for our customers to access advice over the phone and also through video capabilities expanding all the time so we believe the different mechanisms are there to support our customers Thank you very much If I could follow up on a slightly different question change has come up as clearly a constant here in the sense of the underlying driver of a lot of this and the banks don't seem to coordinate for obvious reasons in terms of legal regulatory reasons why you can't talk to each other about closing branches but is there any scope for industry and banks only look at their own P&L in terms of what to do there might end up being branch and ATM deserts across the country if there's not some level of coordination so I just wanted to get not specifics but some thoughts about how the sector could coordinate and talk to each other going forward I'm full of competition I'm not entirely clear that the complete barrier to some form of dialogue is competition concerns, legal concerns but we are competing when we are a commercial entity and we wish to be successful in our own right and here for the long run we believe as I'm sure others do that branches continue to be a very important part of our proposition but we are certainly open to any suggestions about how we could overall improve the quality of service that we give to our customers irrespective of channel so we'd be happy to consider any proposals but I suspect competition law is not a barrier to that we've signed up for example to the digital charter and that's something that all banks are participating in so there are areas of specific co-operation where we can meet on a common agenda be it on the digital charter where there are aspects where we can co-operate and put the competition and commercial considerations behind us and look at it like that I think that's something I know is planned and I think that they're the type of things that obviously we would be keen to do more of I mean I would agree I think that we're all very mindful of competition constraints but also what do we seek to work together where it is appropriate and I think that Link is another example where we come together to make sure that we're supporting in terms of financial inclusion and as well as the work that we're doing with UKFI on promoting the services that are even more supportive for our customers I can only agree with what the board has spoken I think there is I ever to say from a regulatory perspective there are areas within which we can have conversations and we can discuss the commercials behind that we have different competitive edges and different markets that we play with so there is room and there are dialogue and we do use those forums that we do have in place where we could develop that even further and we'd be keen to hear about that on the feedback I think that based on the discussions today there are definite topics where it would be helpful for us to work collaboratively together I think that that would be one area going forward that we would love to welcome your feedback on so thank you, thanks very much Perhaps a final follow-up from Gillian Martin Very much, convener I just want to follow on from Elaine confidence in online banking being a barrier to a lot of people and I think that it would be remiss for us to not mention the fact that we did have a situation to TSB with online banking was not available to people and as a result of the issue with your IT system you've got quite a lot of phishing scams now obviously I don't want to add to that nervousness but the fact remains a lot of people were subject to some kind of fraudulent activity as a result of this I'd like to give you the opportunity to tell me what you've learned from that and to give people confidence that they can trust online banking and that maybe others would like to pitch in about what they've done, maybe learned from the situation that TSB had that added to that nervousness that Fulton MacGregor has mentioned I think that when a bank goes through any major IT change we're always at higher risk of fraudulent activity and that's exactly what we saw and we reacted very quickly to that and we're extremely sorry to customers for the inconvenience they had and extremely grateful for the amazing partners we have in branches that reacted so well I think that what we've learned from that and we will continue to learn through this is that at times like that where people have depended on mobile they then revert back to branch either through necessity or they find comfort in that face-to-face situation unfortunately we have been able to meet that need for the customer we've had to respond quickly because it was at such a scale and it probably resulted in customers' accounts being blocked more than they would have been blocked but it was a safeguard what we have seen is our digital and mobile return now to pre-migration levels so customers can have that confidence we partnered with fraud awareness firms telephony firms and we put out messages both in national newspapers on our internet etc to raise awareness to the public we do have the thumbprint and Irish recognition so that helps with the safety of that but I think in all of this we have learned the importance of multi channels responding quickly not being complacent with the fraud piece you just mentioned there and there's been a lesson for other banks as well that when those systems did fail people turned to their branch for accessing cash for giving that security aspect of things the real of a situation for the trajectory is that branches are closing what fails safe what backup is there should anything happen an IT problems do happen so I would like to throw that open to the other banks particularly the Royal Bank if it's so many closures what backstop is there for people should your IT systems fail and they can't access any cash we had a significant computer issue in 2012 which impacted our customers a lot has changed in the organisation since then but in terms of how customers have gone today and how it would be different to then the physical kind of points of presence have tripled in the last five years so the ability for people to access a place where they can go and do their everyday banking has gone up by a factor by three times since that happened so there's more flexibility and there's more ways of doing your banking today than there were then so I think yes there's been an outage a problem such as the one that TSP experienced I think we all feel that so nobody wins in that situation so the job is to make sure that our customers all of our customers are confident and capable in understanding how they can continue to do their everyday banking and as I say there are more options today than there were five years ago many many more options Do you agree then that we'll always need cash because I mean probably like most people or many people when I grew up there wasn't an internet but I now do internet banking but also use cash but the problem is when the internet banking fails or an individual can't operate it for whatever reason we all have to fall back on cash so do you agree that there must be always a provision for that on whatever basis so that people are not left in the position that they simply can't buy things I believe that that is the case yes it is not our intention to not provide access to cash for our customers as a result of branch closures you all have heard a million statistics about what's happening to cash there's definitely less usage of cash for payments and that's projected to that reduction is projected to increase but I think for as long a period of time as anybody in this room is going to be concerned about it that cash will be a part of society there's a really important part of our proposition as well so while we have all of us made some changes I would certainly say from our perspective that branches remain a really important part of our proposition we have invested in telephone banking we have invested in video but actually there are times when people want to see somebody face to face and we recognise that do the rest of you agree with the proposition that we will always need cash sorry again the time frame that I can foresee I think that is true it is also true that 7 out of 10 people regard the bank as something that they carry around in their pocket today that is only going to increase but I do think that cash is always going to be an important backstop at least for the medium term do cash is a very very important question because the areas within banking that are becoming cashless that's why you have to transact digitally and you will not accept cash but to your question will cash be required so if you for example shopped online or you went to Amazon you cannot do it other than paying it via digitally but there will be an element that will always be there that will require cash and for the foreseeable future there will be but that will change and it will start to migrate even more to a cashless environment and it won't be just to a tap and go at ease I agree that cash will be around but I think as well we still have to be mindful of the pace of change and how customers behaviour change and we must follow that as well All right, well thank you very much to all of you for coming in today I'll suspend the meeting and we'll move to private session