The German savings banks are doing everything they can to avoid having to close one branch after the other because it is no longer worthwhile to operate. Latest idea: Savings banks and cities work together and offer municipal services ranging from extending ID cards to exchanging driver’s licenses.
This has been available in Cologne for a short time and the service is already being tweaked in Hamburg. There you can even get a fishing license from the Sparkasse. Behind the new service, however, is the naked struggle for survival.
The Kölner Sparkasse is particularly innovative: From now on, they announced in December, not only will they have everything to do with money, but official business can also be dealt with on their premises: extending ID cards, applying for a passport, exchanging a driver’s license . This is made possible by the city’s mobile citizen service: once a week, residents of Cologne can apply for identity cards and passports from two city employees at the bank. If the project goes well, it will be extended to other savings banks in Cologne.
The people of Cologne call their approach a “pilot project”. However, he is not quite as pilot-like: The Hamburger Sparkasse has been trying for years to combine financial services and municipal services in an unusual way. More Sparkasse branches were added in December. Even the fishing license is now available in a Hamburg Sparkasse. In both Cologne and Hamburg, those responsible are full of praise for their innovative idea: “We help ensure that people from the surrounding area have short distances and support the city in making its service network even more closely meshed,” says Birte Quitt, division manager at the Hamburger Sparkasse.”We bring the offer to where the people live, work and live,” says Hamburg district senator Katharina Fegebank.The mutual words of praise from Cologne sound similar.
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Only Angela Langen, Head of Private Customers at Kölner Sparkasse, adds a sentence that comes closer to the much more bitter truth than what the others are telling. “In times of resource conservation, we ourselves are interested in making unused office space available for use by the city,” she says. She could also have said: The branches for the financial transactions are now a million dollar grave for those financial institutions that have to uphold the principle of regionality. Maintaining it is no longer worthwhile. Because while other banks operate exclusively on the Internet and, for example, the Sparda-Bank in Berlin has now even closed its headquarters, while more or less private large banks such as Deutsche Bank and Commerzbank are quickly closing half of their branches and more under pressure from the management board, saying goodbye to the branch at the savings banks and also at the Volksbanks is a painful and agonizingly slow process. Because they both have a regional mission that they cannot simply shake off.
And so savings banks and Volksbanks grasp at any straw that delays the process. In some regions, such as Hesse, savings banks and cooperative banks, which are actually fierce competitors in the competition for customers, already share individual branches: on Mondays, Wednesdays and Fridays, the customer enters a red-lit savings bank, on Tuesdays and Thursdays the same rooms are then opened illuminated by the blue light of a Volksbank.
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Achim Brunner, who manages the Raiffeisenbank in the Hochtaunus near Frankfurt, knows how dreary the business is otherwise. It has its headquarters in Bad Homburg and has now closed four branches at once. “They were maybe visited by two customers per hour, who, for example, withdrew money or transferred money using a paper form,” says Brunner on Deutschlandfunk. Keeping the locations open all day and employing two or three people there is that simply does not pay off for the cooperative bank. The radical step of closing all four branches saves the bank more than one million euros a year. “Branch branches are not part of the future of the banking industry,” says bank boss Brunner.
It is an insight that other banks have long internalized. In any case, branch dying is a well-known phenomenon in the industry. According to the Bundesbank, the number of branches has fallen in the past 20 years from more than 54,000 to around 21,700 most recently. Joachim Wuermeling, member of the Bundesbank’s Executive Board, attributes this to increasing digitization: “Ultimately, we experience the same thing at banks as we do in retail, booksellers or the music business,” says the bank supervisor. Economic activity is increasingly shifting to the Internet. The corona pandemic has accelerated the death of branches: Some branches closed with reference to the conditions in the pandemic – they have not reopened to this day. Branches, once the source of banking business, increasingly caused losses for financial institutions in the age of online banking , says Wuermeling. “Of course, the banks want to avoid that, and we ask them to do the same.”
The Bundesbank described what Wuermeling means by this in its most recent stability report. Ironically, the biggest risks are hidden in the smaller banks, she calculates. There are already massive value adjustments at savings banks and Volksbanks. In the meantime, the reserves set up for this have been used up. The Bundesbank is therefore warning of significant losses that savings banks and Volksbanks could make in the coming months. The reason is the rise in interest rates, which makes long-term, cheaply issued loans uneconomical, as well as valuation losses in the banks’ securities portfolios. In the meantime, write-downs have caused the core capital of the Volksbanken and savings banks to melt away. Closing a branch or – even better – at least being able to operate it more economically by offering additional services is certainly the lesser evil.
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