Sparebank1 NordNorge is closing 16 of its 31 branches, including Longyearbyen’s only physical bank location, due to increased digitalization by customers that has accelerated during the COVID-pandemic and a desire to cut costs to increase profits, the company announced Thursday.
The impacts of the closure immediately resulted in widespread harsh criticism from locals, including Longyearbyen Mayor Arild Olsen stated the matter needs to be brought to the attention of Parliament.
“Changed customer behavior, tough price competition and expected demographic development” are prompting the move expected to save about 40 million kroner a year while affecting about 35 employees, the bank stated in a press release. The release does not specify a date for the closures.
Liv Ulriksen, the bank’s CEO, said in a prepared statement “very few customers go to the bank anymore,” the bank will still have branches in the “entire” region of northern Norway and have far more outlets in the area than their competitors combined.
But that statement is at odds with the impact in Longyearbyen and the rest of Svalbard, where people will be left with no in-person options and no means of simply driving to “the next town over.” Immediate local reaction was overwhelmingly harsh about the general implications and the bank’s seeming failure to grasp Svalbard’s unique situation.
“The fact that we have a local bank has been the reason why I have stuck to (Sparebank) for all these years,” Elise Strømseng, an Arctic geology student advisor at The University Centre in Svalbard, wrote on a local Facebook page. “The close contact at the bank or by e-mail to local customer service representatives who know you, the community, Svalbard, your town has been crucial. Despite occasionally lower interest rates and higher fees than others. Now (the bank) has removed what I recently answered in a survey was important to me as their customer.”
Longyearbyen Mayor Arild Olsen, in a separate Facebook post, stated the impacts of the closure needs to be raised with Parliament because “when the financial world physically withdraws from an entire society the red warning lights should flash.”
“We are different from the mainland in absolutely every way,” he wrote. “That has been established time and time again. Also in this case the Longyearbyen community is geographically cut off from the mainland, as is the case with large parts of the business community and legislation.”
“This requires local knowledge and expertise to understand. And this is expertise Sparebank 1 – our local bank – has built up over time and it is this bank that offers loans for cabins and houses in Svalbard. It is also this competence that contributes to the fact that Norwegian citizens can not have an almost normal financial world through their ‘D’ numbers and direct contact with advisers at the local bank, just to name a few.”
The bank is located in the same building as Longyearbyen’s post office. Norway’s postal service announced in August it is closing nearly all of its 31 post offices, but six in two cities will remain open: Oslo and Longyearbyen.
Ulriksen said she understands some customers will be upset by the decision and efforts will be made to work with those used to in-person banking.
“Several of the affected offices are located in smaller locations, where the service offering has been reduced over time,” she said. “Although the reasons are justifiable, I have respect for the fact that it has resulted in negative experiences.”
Inquires by Svalbardposten to Trond Hellstad, the local branch manager were referred to regional communication director Stein Vidar Loftås, who essentially repeated the company’s general position by stating “there is no longer a need for the traditional bank branch. We have made a thorough acquisition of knowledge from customers, who tell us that they have very little need for a physical bank.”
The bank stated in its profitability program launched last year it hoped to increase earnings by 200 million kroner annually. The press release states the shutdowns will help the bank meet its fiscal targets by the end of 2021.