Consumer union says bank branch closures must stop

Luxembourg's consumers union (ULC) deplores cost-cutting measures by banks. Matic Zorman

Luxembourg's consumers union (ULC) deplores cost-cutting measures by banks. Matic Zorman

The Luxembourg Consumer Association (ULC) is concerned about the rise of mobile banking services in the grand duchy in an effort to cut costs and modernise services, saying this trend should not replace conventional banking.

In a press statement released on Monday, the union highlighted the recent “mobile branch” trend adopted by banks in an attempt to save money, saying that this could have a negative impact on not just older clients but also young people who may want to withdraw cash or make transfers in person.  

While it commended the mobile banking revolution, it said that this option is just but a “small consolation” and should not replace fully fledged banking, noting the closure of savings banks, post services and other resident banks in recent years. It particularly stressed its concern for rising bank fees, neo-banks without counters and decreasing ATM points.

The Spuerkeess, for example, closed 11 of its branches last year, with the ULC noting that the mobile branch system it adopted only serves customers once a week and just for an hour and a half at each of its stops for regular banking transactions.

Last year, the Luxembourg bank BGL BNP Paribas also decided to permanently close seven of its 41 branches in a shift to digital banking as it had observed a move towards e-banking during and after the lockdown. In June 2021, ING announced that 12 of its 16 branches will only be accessible by appointment and that it intended to focus on digital support for customers, also citing the pandemic as a trend setter.

However, the union argued that a study shows this trend, expected to continue in the coming year, will only impact access to cash or bank transfers. It called this move “anti-social” and warned that a further reduction in the number of branches could reduce quality of life in rural areas. In its support of pro-cash policies, it said it is important to keep services running even if only to allow customers the possibility to access cash in “unforeseen situations”.

In its past efforts, the ULC had contacted the finance ministry and introduced a petition some years ago demanding at least a revision of transactions fees and pro-cash policies. These requests have been unsuccessful.  

The union stressed that the new trend is problematic for especially older customers who may have difficulty using online banking tools and often have to depend on teller staff or family members and friends. After the summer, the ULC has planned a meeting with the communes federation Syvicol.