Thousands of bank branches closed
Analysis of bank branch closures since 2015 have shown not only that huge numbers of bank branches are closing but also that closures are happening at an accelerating pace. Over 700 bank branches closed last year alone and 220 branches are already scheduled to close this year (2022).
In total, since 2015, 4514 bank branches have closed and there are clearly more closures to come. Barclays, Halifax, HSBC, Lloyds, Natwest, Virgin Money and TSB have all announced branch closures for 2022. Bank branch closures make it harder for people to access their cash for free and millions of people still need or want to use cash.
Government plans to protect access to cash
The Government have said that they recognise the importance of protecting access to cash and in March 2020 they committed to introducing new laws to ensure everyone who needs to use cash can continue to access it for free.
However, so far the only new legislation was an amendment I introduced to the Financial Services Bill allowing cashback without purchase. This means that shops, cafes, or any business that wants to, can offer cash from a card transaction without the consumer needing to buy any goods or services.
The Treasury did run a consultation on how cash legislation could work, including proposals to make the Financial Conduct Authority (FCA) the lead regulator for ensuring that people can continue to withdraw cash locally. This would include powers to hold the banking industry accountable if further decline of the cash network put access under threat. The consultation closed in September 2021 and we are still waiting for the results to be published.
Other steps to protect access to cash
Just last month (December 2021), a ground-breaking agreement to share services between the major retail banks was announced. The collaboration was achieved through the Access to Cash Action Group (CAG) a UK Finance led group Chaired by Natalie Ceeney with representatives from all major retail banks, Age UK, Toynbee Hall and the Federation of Small Businesses (FSB).
It is a significant achievement and builds on the lessons learnt from a programme of Community Access to Cash Pilots also brilliantly run by Natalie Ceeney. As well as the bank’s commitment to share services LINK will independently assess a communities cash needs. LINK already fulfils this role for ATMs, and they will also have the power to commission services to meet community cash needs. Shared banking hubs will be rolled out alongside free ATMs, enhanced Post Office services, and cashback without purchase.
Whilst this is a great step forward in protecting access to cash Which? has called on banks to pause all closures while these measures, (independent assessments, a summary of the assessments and seamless transition to alternative services) or new legislation can come into force.
Why does this matter?
Banks say closures have been driven by an increase in online and mobile banking, and a rapid decline in the use of physical branches. Recent figures show two-thirds of adults (72%) used online banking and over half (54%) used mobile banking last year.
However, while the majority are moving to online banking a significant minority are not. So, cash still matters and it matters materially to millions. There are plenty of people and small businesses that rely on local banks and the services they offer.
We’ve certainly seen since the beginning of the pandemic that when traditional face-to-face services close or are reduced, then it has an impact on the old, disabled and financially vulnerable. Some people would love to bank online, but can’t because of their broadband.
But whether due to a lack of digital inclusion, such as lack of access to digital infrastructure, devices or skills, or whether habits related to financial inclusion such as desire to use cash for budgeting, access to cash is for many a basic human right that must be protected.
The future is digital
As well as being a fierce advocate for protecting access to cash I am an equally enthusiastic proponent of digital technology. The direction of travel is more, not less digital, therefore, we need to understand what we can do to help bring people with us. Look at the success of how we switched over people from analogue to digital TV 10 years ago. We need a similar review to understand the issues and to come up with the answers. I’m calling on the government to enact the laws they have promised to protect access to cash but also to look just as hard at ways to ensure that everyone is included and has the right to access digital payments.
- Calling on banks to pause branch closures until CAG proposals and legislation in place.
- Latest analysis reveals the rate of bank branch closures has surged with 736 branches shutting their doors this year, and over 220 already lined up for closure in 2022.
- 2021 saw a 17% rise compared to the rate of closures in the previous six years when an average of 52 branches were closing a month.
- 298 branches closed between June and August
- Over 220 bank branch closures scheduled for 2022
- Annabel Hoult has written to CAG warning that the rate of bank branch closures ‘seriously undermines’ industry efforts to address dwindling cash access.
The Independent, Bank branch closures should be paused immediately says Which?