Just under half of all the UK’s high street banks could close by the end of the year, prompting calls to turn empty branches into hubs shared by banks.
Even though 81pc believe that trust is the ‘most important factor in their purchasing journey’, 76pc say they lack confidence in using their banking services online, according to the latest research by security software company SmartSearch.
Nonetheless, as banks continue to close branches, rising numbers of customers are being left with little choice. Following savage cost-cutting drives, experts fear as many as 40pc of all high street banks could close within the next twelve months. This is in spite of demand from customers for a face-to-face service they feel they can trust.
John Dobson, CEO of SmartSearch, says that the pandemic has hastened the switch by consumers from using physical branches to managing money online. Yet the bank closures come as cyber fraud hits record amounts. According to the banking trade association, UK Finance, £208m was scammed via bank transfers in the first half of last year alone.
Cash machines to decrease in number
TSB is in the process of axeing 164 branches in a run down that started last September, while Santander is on target to close 111 branches by the end of August. HSBC has already admitted that 82 branches will shut permanently this year. Over the last decade, around one third of all bank branches, in excess of 6,000, have closed for good, with Barclays, Lloyds and NatWest also reducing their exposure.
At the same time, cash machines which are free to use are being decommissioned at the rate of something like 500 per month.
Natalie Ceeney, author of the Access to Cash Review, fears the wave of closures will not only lead to a loss of access to cash but cause lasting damage to the high street. She believes there should always be an option to use a branch for people who are not wholly confident about online banking. She goes further and argues that some of the axed branches should be converted into shared ‘banking hubs’ in order to offer basic banking services to customers of all the main high street banks.
The hubs, which could be operated by the Post office, would enable customers to deposit and withdraw cash and deposit cheques. On particular days of the week, customers could meet representatives of their banks to open accounts or discuss more complex financial issues. Ceeney said such hubs would ‘breathe new life’ into struggling communities.
However, regulations would have to change for banks to agree, she added. Otherwise, they could be accused of flouting competition laws by being seen to be colluding.
Hub model expected to last only six months
The banking hub model is already being used in some of the eight pilot schemes that have been launched recently to safeguard access to cash. The initiative is examining new ways of making cash available in local communities, such as allowing people to pre-order cashback from local shops through an app, improving Post office facilities and installing free-to-use cash machines in communities that previously did not have access to one.
One particular town, Rochford in Essex, has not had any banks since the Barclays brand closed in 2017 and has only two cash machines, one of which charges fees. Its Post Office-branded banking hub opened in a former carpet shop earlier this month, with a free-to-use ATM and an automated deposit machine that enables consumers and businesses to bank cash and cheques. A counter allows people to complete personal banking tasks.
Furthermore, on each day of the working week, two members of staff from one of five banks, Barclays, HSBC, Lloyds, NatWest and Santander, help customers open accounts and deal with specific financial issues.
The pilot schemes are backed by major banks, consumer groups and small businesses, and are overseen by a board chaired by Ceeney. Yet each is expected to run for just six months due to limited funding.