Opinion: We don’t need branch closures, we need smarter banks

It looks like banks are going the way of the cheque book – needed by a few, but vastly superseded by technology

This week it’s been revealed that three of Britain’s biggest banks – HSBC, RBS and Barclays – will close around 400 branches this year, of which around 200 will be HSBC’s.

It’s a move that will potentially leave thousands of people without easy branch access and has been criticised by campaigners who say it will be a disaster for those who can’t rely on the web for all their banking needs, particularly some older people and also small business that rely on frequent visits to their branch.

Back in 2014, a number of banks, including Barclays, Lloyds and RBS, had voluntary ‘keep it open’ pledges, where they had pledged to continue providing banking services to communities which had just one bank left.

However, the Campaign for Community Banking Services reports that those pledges had all been ditched by the end of that year, during which it recorded more 479 branch closures – of which 124 were the last banks in the area.

“The bank closures will accelerate the death of the British High Street," said Derek French, director of the campaign. "This will particularly have a knock on impact on local businesses and the elderly."

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Missing out on good deals

That is clearly a problem. People without web access already miss out on the best deals and often have to pay extra to access services, for example, booking via expensive telephone lines instead of online.

Financial exclusion is an issue that deepens poverty for some of the most vulnerable in our society, and limiting the ways people can approach banks can only worsen that.

However, it’s not hard to see why banks want to reduce the number of expensive branches they keep staffed and open.

With more customers than ever using online and mobile banking services, footfall is down but the costs of the branch don’t fall to the same extent. HSBC says that 90% of banking is now done using the phone and web, so it is obvious that something has to give.

“We never take the decision to close a branch lightly, and we understand it can be unsettling for the local community,” comments a statement on its website. “In recent years our customers have changed the way they choose to bank with us.

More and more people are using the telephone and internet to complete their banking and branches are being used less often. Across our branch network over the last four years we have seen almost a 40% reduction in customer footfall, and that decrease is accelerating.”

So we can worry about the elderly and small businesses all we want, but it doesn’t make much sense to keep an entire branch open and staffed for just a handful of customers. But isn’t it time that banks and building societies got a bit… smarter?

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Smarter banking

To be fair to the banks, they are attempting a transformation that allows banking access to continue.

Working with the BBA, the trade association for UK banks, and the Government, banks have agreed to a protocol on branch closures. It is an agreement that commits the High Street banks to ensuring customers can still access banking services if a branch closes and that the community is given fair notice of any withdrawal of services.

And that is undeniably having some effect - HSBC is working with the Post Office to provide services, while Barclays has teamed up with ASDA to ensure there is still some access to in-person banking facilities when it leaves an area.

But could there be another way to revolutionise how we access in-person banking facilities? Maybe we’re going about this all the wrong way – we’re looking at ways to mop up remaining in-person customers while accepting an inevitable move online, instead of considering how to transform banking access so that it remains viable for everyone.

After all, there are always occasions where it’s necessary to actually attend a bank branch, for almost everyone.

Whether it’s cashing a cheque, requesting further advice, helping a small child pay in their pocket money and get their book stamped, getting change for an event or any of the hundreds of reasons that mean even digital natives occasionally wander into their local branch, we should be preserving that choice of access rather than accepting the decline.

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Joint bank branches?

So I’d argue we could be cleverer. If the banks can work with the Post Office or a supermarket chain then why can’t they work together to provide shared banking hubs?

It’s hard to see why banks couldn’t provide funds to support shared branches, where customers can speak to a human and carry out their basic banking needs – including making appointments to meet personal banking advisers who travel in from their own provider when necessary.

Yes, all banks have different systems and different protocols, but if it’s possible to provide banking services via apps, websites and supermarkets, it cannot be impossible to provide a unified shop front for customers who need to access a bank in person.

Perhaps it could be administered by a separate agency – maybe the Post Office could maintain more of its branches this way - and funded by the banks.

Admittedly, this is just one idea and I freely admit to having no in-depth knowledge of banking infrastructure.

Some banks are clearly starting to hatch their own strategies to bring more people into their branches.

Last week, Barclays announced it is trialling a deal with retail giant Amazon that will allow people to use its branches as collection delivery points.

Time will tell whether that initiative succeeds (especially given the hours that banks tend to operate), but it’s a good start nonetheless.

Now must be time to take control of the rapidly changing banking sector, to make sure it’s fit for purpose for the future as well as to reduce the impact of closures on the financially vulnerable right now.

The way we bank is changing and, as one high street provider has said, that change is accelerating. Yet a ComRes survey has shown that 70% of people think it’s important to have local branch access. We need to stop treating it like a hangover from a pre-internet time and more like a service that matters and must be provided, even at the cost of combining access and losing some branding.

If it was in the banks’ interests to change but maintain branch access then they would find a way. It’s time to demand they act in the interests of their customers too.

What do you think? Do banks need to fundamentally reform how they provide access or are closures simply inevitable? Have your say using the comments below.

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