Technological advancements has resulted in a disruption in businesses and other spheres of life, particularly the effect that made financial institutions increase their digital capabilities that still delivers great customer service.
Earlier this year, major key traditional banking institutions in Europe such as HSBC investment banking company, Lloyds Banking Group, and Banco de Sabadell financial services have made it imperative to increase their digital operations. This has led to the shutdown of physical branches, enabling them to reduce heavy variable costs associated with running a physical office. The British bank VIRGIN MONEY has also made this great move.
Virgin money which has been in existence since 1995, has decided to shut down 31 out of 162 branches in the coming months. In recent times financial institutions are reducing physical operations in the UK and across the globe as most customers get greater convenience using the online banking platforms.
Virgin bank is the latest lender to cut back its high-street presence after the pandemic to increase its competitive advantage in service delivery and staff management. Indeed this decision would result in a significant increase in the demand and supply side of the firm.
On the demand side, many virgin customers would carry out financial transactions more seamlessly and conveniently. Traditionally, customers would have to head over to their respective bank branches for transactions within the country, and certain banks were only open until a certain time. These are major limitations on the demand side.
Virgin's bank restructuring plan would profoundly mitigate these limitations, as the bank is ready to throw in $34 million as charges for restructuring, which would be profitable in the long run.
On the supply side, the move would drastically cut variable and other related costs related to running a physical branch. In addition, staff would be able to work remotely, deliver more efficiently.
Virgin said the closures would trigger a restructuring charge of 25 million pounds ($34 million) in the fourth quarter. It will also book a 20 million pound charge from cutting back and modifying its office space.
The bank also said its restructuring charges for 2021 will now be 145 million pounds in total.
