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Special report: The Unprofitables

Most vulnerable to suffer from cash machine changes and closures

High street banks may shut all free cash machines in the future. Abbey National this week announced the imminent closure of 100 cash machines and couldn't rule out further closures.

Abbey National's move comes after PC Advisor's report into the rise of convenience cash machines.

"I think the scene in the future will be that [bank-owned] ATMs will become unprofitable and… will be outsourced," said Dominic Kirsche, head of Retail Banking Research. RBR has worked for nearly all the major high street banks and credit card firms.

In other words many cash machines will become convenience units, run by private firms for profit.

Abbey National's closures will be of out-of-town machines but some are saying the erstwhile building society has taken a wrong turn.

The Consumers Association agreed that the closure of ATMs and bank branches in rural locations could hit people without access to internet banking hard. Old people in particular would be affected.

"It's clearly a disadvantage for them. Banks have the responsibility to think in creative ways so that these people can be served," said the Consumers Association.

Banks have for years been trying to move customers, who are generally unprofitable for them, to cheaper methods of 'service delivery', aka getting hold of your money.

This comes under the industry moniker CRM, or customer relationship management and involves online banking as well as call centres, TV banking and the like. Abbey National has tried all these as well as cutting back heavily on branch staffing.

By trying to 'migrate' customers online, closing cash points and unprofitable branches, banks are making consumers pay for the access methods that are cheapest to run.

"[But] can you criticise the bank?" said Kirsche. "Banks have to balance profitability versus customer service. The number of locations where this is an issue is quite small."

Although Abbey National said it wouldn't close an ATM unless there was a competitor's nearby, experts predict that in the future free-to-use cash machines won't exist at all.

Nationwide, one of Abbey National's rivals, was gleeful about the imminent closures.

"I don't see the need to do what they're doing. If Abbey is going to go down this route it'll be a bad thing for everyone," said Nationwide yesterday. "Any consumer who goes to a closed-down Abbey ATM is welcome to come to ours free of charge."

"There's been 'cherry picking' in the banking industry going on for some time," agreed the Consumers Association. "The industry needs to ensure there are safeguards in place to prevent this."

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