On Friday (29 September 2023) Barclays closed three more of it’s branches in Redditch, Bude and Hanover Square London. They are not alone. In recent weeks, HSBC, Lloyds and Halifax have also pulled down the shutters for the last time on branches across the country.
Since 2015 nearly 5000 branches have closed and more than 2.2 million customers now have to travel miles for face-to-face services. Twenty-three constituencies have had all of their bank branches closed.
This would be hard enough for those who as a matter of choice still wanted to visit a branch in person, even worse though banks still often insist that customers come in to open an account or verify their identity. It’s not difficult to see the problem.
The digital world beckons and banks are reluctant to keep paying what they perceive as high prices to maintain branches that are used less and less. The pandemic accelerated adoption of online banking as well as leading to a decline in the use of cash.
For millions though, differing rates of digital inclusion, unreliable internet access and understandable fears as to the prevalence of on line fraud mean that branches remain a necessary service.
Banking hubs – shared banking facilities – have been proposed as a solution but the scale and speed of the roll out is far from ideal. In April when I asked the government how many shared banking hubs had been opened in the last 12 months the answer was just 4 – in the same period 847 branches had closed.
Another option for a face-to-face service without travelling miles is your local Post Office. Although this only offers basic banking and there are things you can’t do such as apply for a loan or open a new bank account. Many banks also still seem to rely heavily on in person identity checks.
Santander made headlines recently when they insisted a bed-bound customer come into one of their branches for identity verification following suspicious activity on his account. Unfortunately, the customer had suffered a stroke and required 24-hour care. The bank insisted there was no other option, and the customer would have to book a private ambulance and carer. The issue was only resolved when the Guardian’s consumer champ,ion got involved.
I have heard numerous stories from parents trying, ultimately unsuccessfully, to open accounts, with our ‘big banks’ for their children, one being advised to visit her local branch – some 5 miles across London.
Consumer protection, customer service and right sized regulation are critical. This was our mission during hours of scrutinizing the Financial Services and Markets Bill, now, Act. The legislation gives new powers to the Financial Conduct Authority (FCA) to “ensure reasonable provision” of cash deposit and withdrawal services for personal and business current accounts in the UK. This is positive although it’s clear the government could have gone much further.
During the passage of the Bill through Parliament I argued that we need to ensure cash acceptance, designate the cash network as essential national infrastructure, and have a review into access to digital financial services. We must do more to ensure that everyone can benefit from all the financial innovations in this space.
One recent development explore a role for banks as “identity assurance” services. Lloyds Banking Group, working with the Prime Minister’s office, have been testing whether banks could vouch for their customers’ identities to other organisations via a simple smartphone app. Whether this is a role for banks is a point well worthy of debate. The question of digital identity and our ability to assert our credentials is well overdue for far greater consideration and progress.
Banks still have much to do.