DANISH BANKS (4)

In an earlier post, I criticised the new strategic plan of Danske Bank, Denmark's largest. The essence of this seemed - to me, at least - to be to replace people with machines and the internet, which I didn't think would be good for customer relations. My son disagreed with me on this, but the Danish general public apparently agree; Danske Bank's popularity is in freefall at the moment.

Their latest move is not going to change that. Since 9 January, 131 of the bank's 186 branches in Denmark have stopped providing teller services. On Fünen, where I and roughly 500,000 other people live, there will only be four such branches that do; two in Odense, one in Svendborg and one in Nyborg. So, if I were a Danske Bank customer, I would have to travel at least 33km and then park before I could get (my own) cash out of a branch as opposed to an ATM. In other parts of the country - West Jutland, for instance - it would be twice as far. And when I got there, it would cost me kr.40 to do so, unless I had kr.750.000 in the bank (which most people don't).

A necessary change in order to return the bank to profitability, say its leaders. I have no problem with that idea in principle; the problem is that Danske Bank's catastrophic lack of profitability during the financial crisis - one estimate has put the cost of the past five years at more than kr.90 billion - had nothing to do with teller services in branches and everything with terrible investment decisions (in Ireland and elsewhere). Secondly, although my son is surely right in saying that internet banking is the way of the future, there are still many people, particularly older people, who don't like machines, don't know how to use computers, or wouldn't trust the internet to do financial transactions. What is particularly relevant is that these people tend to be savers, whose mortgages have been fully paid off, and who therefore tend to provide a cheap and stable mass of deposits, the bread and butter funding source of any bank. Alienating them, which Danske Bank has done in spades, doesn't strike me as very sensible.

It is undoubtedly the case that Denmark has too many banks, and that further consolidation is both necessary and likely (Sparekassen Lolland was taken over by Jyske Bank only yesterday, for instance). But the sector should be wary of emulating the British experience, where there are only a few, monster-size, institutions in which customers can't talk to a human, unless it is from a call centre in Bangalore. After all, every business needs customers, even a bank.

Walter Blotscher