Cantillon: Bank of Ireland overlooks social contract

Banks are having a tough time finding love these days, and yesterday's notice by Bank of Ireland of a significant retrenchment of customer service will have done little to endear them to customers.

From later this month the bank plans to turn away from bank counters anyone withdrawing less than €700 or depositing less than €3,000 and direct them to ATMs to conduct their business.

Charity Age Action was quick to note both that older people do not feel as comfortable with the concept of online banking or, in some cases, even ATMs, as those a little younger, or with the security risks involved.

In essence, anyone seen dealing at a counter can be assumed either to be withdrawing more than €700 or have more than €3,000 to deposit. Either position would be sufficient to have a certain cohort in society targeting people on the basis of presumed wealth.

There was a little give later in the day after Minister for Finance Michael Noonan intervened to call the proposal "unnecessary". Hardly surprising given the State still holds a 14 per cent stake in the business.

The problem for the bank, and its peers, is their need to make sufficient profit to run their businesses in a more tightly regulated environment where some of the often highly profitable risks they assumed previously are no longer open to them.

And, as the bank says, just 4 per cent of total transactions fall within the scope of those no longer being offered over the counter. However, that’s still substantial business.

Customer-facing personal banking is undoubtedly expensive and it has been on the wane for a long time. But, in the aftermath of the financial crisis, Bank of Ireland and its peers need to understand there is a form of social contract between them and their customers. If it’s comes down simply to a financial transaction, technology will quickly make Bank of Ireland and other “legacy” institutions redundant.

It’s not just about making money.