Banking Deserts: The Impact of Branch Closures on Customers and Communities
The closure of physical bank branches has become a growing concern for many, particularly those who rely on traditional banking services. While banks argue that customers are increasingly turning to online and mobile banking, the reality for some is a lack of access to essential financial services. This article explores the impact of branch closures, the challenges faced by customers, and the potential solutions being proposed.
The Problem: Banking Deserts
Banking deserts are areas where access to traditional banking services is limited or non-existent. In the UK, the closure of bank branches has led to the creation of these deserts, particularly in rural and suburban areas. According to the consumer champion Which?, a total of 6,795 branch closures have occurred since January 2015, representing 69% of the branches that were open at the start of 2015. This trend has left many customers struggling to access essential financial services, such as cash withdrawals and bill payments.
The Impact on Customers
The impact of branch closures is particularly severe for older customers and those who rely on traditional banking services. For example, Patricia Payne, a 78-year-old resident of Chertsey, must take a near four-mile bus ride to access a bank. She admits that she struggles with online banking and seeks out a branch to make withdrawals and for help with transactions. "I find it hard," she says. "My son has showed me how to use the app, but I’m useless."
The closure of branches has also had a significant impact on small businesses. Radhe Mali, a fruit and veg stallholder on Staines High Street, says that "banks closing is a big problem" for small businesses like his. As a customer, Lynne Bulmer, fills up her basket, she says she is worried about bank branch closures. "So many people don’t get it, and sometimes I’m one of them," she says, expressing her concern about the challenges of online banking.
The Role of Technology
While banks argue that customers are increasingly turning to online and mobile banking, the reality is that not all customers have access to these technologies. According to a YouGov poll, three-quarters of Britons say access to a physical bank branch in their local area is important to them. This highlights the need for banks to provide alternative solutions, such as banking hubs, to ensure that customers can still access essential financial services.
Banking Hubs: A Potential Solution
Banking hubs, where lenders share a single location to make up for local branch closures, are being proposed as a potential solution to the problem of banking deserts. These hubs operate in a similar way to a standard branch, with a counter service run by Post Office staff where customers of almost any bank can withdraw and deposit cash, make bill payments, and carry out regular transactions. However, hubs are being opened at a slower rate than the closure of individual bank branches, with a minimum of 1,200 hubs required to replace the lost branches.
The Way Forward
The government has started to pay attention to the issue of branch closures, announcing an independent review to "protect access to face-to-face banking." This review will gather evidence on the "real-world impact of branch closures, identify who is most affected, and assess where further action may be needed to protect access to banking services."
In conclusion, the closure of physical bank branches has become a growing concern for many, particularly those who rely on traditional banking services. While banks argue that customers are increasingly turning to online and mobile banking, the reality is that not all customers have access to these technologies. Banking hubs, along with other alternative solutions, may provide a way forward to ensure that customers can still access essential financial services. However, more needs to be done to address the issue of banking deserts and ensure that all customers have access to the financial services they need.
