Banks must offer alternative services before closing branches
New deal means alternative banking services must be provided before shutting branches.
Banks will be forced to minimise the impact of branch closures on their customers, following a new agreement between the major banks, consumer groups and the Government.
The new deal means banks will need to establish an alternative way to access banking locally - which ought to be devised as a response to each individual community -and will need to be in place before the branch is closed so that there is no break in service.
These alternative banking methods may include introducing more free to use cash machines, movable banks ‘on wheels’, and the ability to deposit cash and cheques into an account at a local Post Office branch.
Branch closures
The Campaign for Community Banking Services (CCBS) reports that 479 bank branches were closed in 2014, which was more than double the number of closures in 2013. 124 of these, says CCBS, were the last in their community, leaving many without a local bank at all.
Anthony Browne, chief executive of the British Bankers Association, said that the way we bank is changing, highlighting the extensive use of digital services now used to manage money. “This means that the number of branches is falling,” he explained.
Managing your money online can actually offer an improvement on the traditional branch experience, as the success of banks like First Direct – which has no physical branches – demonstrates. The bank wins every customer service award going for its 1st Account, which rewards new customers with a £100 bonus and a further £100 if they choose to leave after a year.
For those who aren’t as digitally-savvy though, and particularly if they live in a rural location a long way from their nearest branch, the closures could make life difficult.
While the CCBS says that it expects even more ‘last in the community’ banks to close this year, Mr Browne says that this new agreement will “make sure customers still have banking services close at hand” if their local bank branch closes.
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The role of the Post Office
Economic Secretary to the Treasury Andrea Leadsom says that she recently met with the Post Office to urge them to make sure customers have access to banking in their local branch.
Currently, many high street banks’ personal account services are available at Post Offices, with a few noticeable exceptions. You cannot deposit cash or cheque for customers of the Bank of Scotland, First Trust, and Nationwide, for example.
Post Office branch numbers aren’t what they used to be, following the closure of around 2,500 in the mid-2000s. However, Paula Vennells, CEO of Post Office Ltd, told BBC Radio 4’s Today programme in January 2014 that the 11,800 Post Offices across the country would be staying open, with no further closures.
Nick Kennett, Director of Post Office Financial Services said that over 4,000 branches had now been modernised, offering a total of 100,000 extra opening hours for customers. While also remarking on the need for commercial agreements with banks to expand services for business customers, he said : “We welcome that the protocol recognises the vital role Post Office plays at the heart of communities to support banking services.”
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