James Sharp: Where have all the branches gone?

It's a shame Peter, Paul and Mary's song was called Where have all the flowers gone? or I would have used that as the title for this article.

In 1971, a former colleague (now retired) left his job one Friday and established himself as an independent broker the following Monday. He started at one end of the Uxbridge Road in Ealing in the morning and by the time he got to west Ealing, he had set-up a dozen agencies. Alas, that’s no longer possible!

Technical revolution

Forty years ago the average insurer branch was about a decade away from having even one IBM mainframe terminal stuck in a corner and probably another five years from the first company-issue electronic calculator. Electronic typewriters were still an aspirational item and your very own desktop telephone was regarded as a badge of rank.

Given that most intra-company communications were by memoranda and most transactions based on a docket system, how on earth did they manage so many branches? If ever there was a retrospective cost argument for centralisation it was then.

Of course, this was an era when people would put on their Sunday best to visit the bank manager and when the ‘manager’ of a bank branch or insurance company branch was a recognised and respected member of the community. Localism and proximity were important, despite the fact that it must have been difficult to sustain, and petrol was incredibly cheap.

Centralisation frenzy?

So, given that they had all the ingredients of what we would now term 'core brand values', the virtues of personal relationships and social responsibility, why were quite so many insurer branches closed as IT infrastructures were introduced? Was it because centralisation was seen as a good thing?

There might have been a whole host of persuasive, but nevertheless short-sighted, reasons to recommend geographic retrenchment –becoming early adopters of management consultants and mainframe technology being just two. However, we now live in the very different world of wifi, voice over IP, extranets and cloud computing. Indeed, one’s laptop now performs much the same in a Starbucks or a Costa as it does in the office.

Therefore, in support of brokers, is it reasonable to envisage that at this year's Biba conference a major insurer might announce re-opening 50 branches, with relatively few people in each, because that would be more economic and provide better service?

Perhaps… But then that’s probably just wishful thinking.

James Sharp is business development director at Ten Insurance