Don’t bank on your banch surviving – Jenny Ross

Many customers still rely on the brick-and-mortar option – and they are being failed by the system, writes Jenny Ross

Registrations for TSB’s online banking service rose by 137 per cent between late March and late June (Picture: John Devlin)

Along with cheque books and final salary pensions, bank branches are fast becoming an endangered species in the financial world. Granted, it’s not a plight comparable to that of the black rhino or mountain gorilla, but the rapid decline in numbers should still give us pause for thought. In January 2015, there were at least 9,803 branches operated by UK current account providers. The network has since shrunk by a third, taking it to 6,439.

Haven’t our banking habits changed just as rapidly in that time? Absolutely – and that’s certainly what the banks will emphasise: footfall in branches is down, so closing our doors makes perfect sense.

Industry body UK Finance found that seven in ten UK adults were using online banking in 2018, and lockdown has prompted even more people to start doing so – according to TSB, registrations for its online banking service rose by 137 per cent between late March and late June.

But this doesn’t tell the full story. While millions of us have fully embraced the convenience of being able to manage our money via our laptop or mobile and will struggle to remember the last time we set foot in a branch, a significant proportion of customers still rely on the brick-and-mortar option.

When we asked 5,116 Which? members in May about the impact of recent branch closures, more than half (53 per cent) said that they were using their nearby branch at least once a month before it closed. Only five per cent said they never used theirs.

Reasons for still using in-branch banking vary: some lack the technology, or the connectivity, others lack confidence in the security of these systems and don’t want to be forced to use it. And then there are situations where you’ve got no choice but to bank in-person – the banks themselves ask customers to use branches for complicated processes, such as registering a Power of Attorney. To help mitigate the impact of branch closures on communities, banks are required to follow a set of guidelines known as the Access to Banking Standard when planning to close their doors.

But a new Which? Money investigation has revealed that these rules are little more than a box-ticking exercise that has done nothing to stem the tide of closures.

Tellingly, we struggled to find examples of closure decisions that have been reversed - HSBC, Lloyds Banking Group, Santander, the Co-operative Bank, TSB, and Virgin Money all confirmed that they have never done so.

Collectively, these banks have closed more than 600 branches since the Access to Banking Standard, which is supervised by industry body the Lending Standards Board, came into effect in 2017.

RBS Group, now known as NatWest Group, and Barclays did not provide an answer to how many decisions they had reversed, but the two banks have closed 651 and 386 branches respectively since the Standard was introduced.

Banks are even failing on the basics. Under the guidelines they must contact affected customers about closures at least 12 weeks before, yet when we asked 5,116 Which? members in May 2020 about their recent experiences of losing branches, only 53 per cent said they had been proactively informed of the closures. 48 per cent only found out after their branches had already closed – including one Swansea resident who told us he was surprised to find a notice on the door of his local branch telling customers that the next nearest branch was now in Cardiff, 43 miles away.

As part of the initial announcement, banks must direct customers to a report known as an ‘impact assessment’. This should set out the main reasons for the closure and point people in the direction of alternatives.

Despite mounting pressure on banks to consider shared banking centres where multiple providers join forces to offer counter and ATM services under one roof, the alternative you’re most likely to be offered as things stand is your local Post Office.

But this is far from a like-for-like substitute – while you can carry out simple tasks like paying in cash and cheques, withdrawing money and checking your balance, there’s plenty more you can’t do. This list includes opening or closing an account and making bank transfers.

And then there are the physical limitations. Colin Cameron, chair of Balfron community council in West Stirlingshire, told us of his misgivings about locals having to rely on the Post Office if Bank of Scotland presses ahead with its branch closure plans: “It’s tiny, has no disabled access, no confidentiality, and if more than three people are queuing it’s full.”

Which? isn’t alone in its concerns that the current branch closure process isn’t up to scratch. Last week, the Financial Conduct Authority announced that it was consulting on its own guidance for banks that are planning to close a branch or cash machine.

Once these new guidelines are in place we want to see the regulator making sure that banks follow them properly, and for it to take strong action if decisions taken by banks lead to communities being cut adrift from essential banking services.

At some point in the future, the potential extinction of bank branches may be less of a cause for concern. But for now, a more robust conservation programme is badly needed to ensure that large swathes of the population aren’t left behind.

Jenny Ross is Editor of Which? Money