Banking black spots set to be election battlegrounds

Bank closures are currently being announced every few weeks, leaving hundreds of communities across the country without a local branch.

Consumer group, Which, has just published a report which shows that over 6,000 have closed in the last nine years. By the end of the year there will potentially be 33 parliamentary constituencies without a single branch, including two in London - Erith and Thamesmead and Dagenham and Rainham are expected to become banking blackspots, as is Sedgefield, the seat of the former prime minister, Tony Blair. It believes the avalanche of closures will be disastrous for the local communities affected and will be an important election issue.

Despite the announcement of government plans in 2020 to protect access to cash - which it hoped would make it more difficult to shut a branch if there was a lack of alternative provision - the number of branch closures has soared. Previously, the rate had peaked in 2017 and then appeared to slow. However, banks are now announcing new rounds of closures every few weeks, mainly on the grounds that customers have ditched traditional counter services in favour of online and mobile banking.

Two hundred closures have already been scheduled for the rest of 2024, including 50 from NatWest, 43 from Lloyds, 28 from TSB, 26 from Halifax, 20 from Royal Bank of Scotland and 14 from Barclays. The number of lost branches is equal to 60% of the national network in place nine years ago. Barclays is the bank accused of closing the most branches overall, with its decommissioned outlets making up about 20% of the total closed.

Undoubtedly, millions of consumers have made the switch to digital banking but there are still significant numbers of individuals and small businesses who are unwilling or unable to do so and who need viable alternatives. These are often the people who are also digitally excluded, unable to afford or use the technology that would allow them to do their banking online. It is particularly challenging in rural areas where people can experience poor broadband and mobile coverage and where there are higher numbers of elderly customers. Left without face-to-face financial advice and support, the impact for them will be disastrous. Research has shown that the cost-of-living crisis has seen more people rely on their local bank to help them manage their money, preferring to get their advice and support from a real person and there has been a rise in the number of people who are returning to cash as a way of managing their constrained budgets, withdrawing and paying in at free ATMs. The fear of fraud is also a very real deterrent. There are also some tasks, such as registering power of attorney, where some banks still insist that customers should go to a physical branch to carry them, necessitating long, expensive trips to their nearest branch.

At a time when many high streets and town centres are already struggling with the loss of local shops and facilities, bank branch closures will weaken them further and add to the sense of empty and unattractive spaces which no longer fulfil a community role, deterring potential future investment.

Which has called for the next government to commit to delivering at least 200 banking hubs in the first two years after the next election. There are already 50 in the UK, with a counter service run by Post Office staff operating in a similar way to a standard branch where customers of almost any bank can withdraw and deposit cash, make bill payments and carry out regular transactions. Opening more hubs more quickly will ensure that essential banking services remain accessible to those who still rely on them.

The Purpose Coalition has been working with its partners to break down the barriers to financial inclusion - key to equality of opportunity. Goal 7 focuses on widening access to savings and credit, one of 15 Goals developed by the Coalition that identify the main barriers that prevent people from getting on in life. Those without financial security and support, and those who cannot access to savings and credit, get left behind, whether that is being able to get on the housing ladder, buy a van for your business or get a new suit for a job interview. Investing in yourself and being able to take the chances that will improve your life are vital to delivering opportunity.

Specialist lending and savings bank and Coalition member, Aldermore, is committed to ensuring financial resilience, improving financial education and providing support for buyers in the housing market, all of which can be significantly undermined if people don’t have access to the support that local banks can provide. Although it operates exclusively online, by phone and through networks, it supports those who are often left behind by other more traditional banks.

Individuals and businesses need access to the support banks can offer if they are to flourish and make the most of their potential. The financial services sector has an important part to play in breaking down barriers to opportunity and the increasing number of bank branch closures are likely to be a factor in the forthcoming election in how well communities feel they are connected and can thrive.