Bank branch closures in recent weeks come as no surprise given that banks have invested heavily in digital banking, but a recent surge in the use of cash highlights the importance of finding a balance.
NatWest said last week it would shutter 23 branches in England and Wales in the next six months, while Lloyds Banking Group recently announced it would close 40 branches.
Banks’ announcements of branch closures are inevitably accompanied by statements that customers are moving to digital channels and footfall in branches is dropping rapidly.
The latest closure announcements were no exception. NatWest said in a statement: “As with many industries, most of our customers are shifting to mobile and online banking because it’s faster and easier for people to manage their financial lives.”
Meanwhile, Lloyds Banking Group said the number of people visiting branches was falling and while branches are important, they need to be “in the right places, where they are well-used”.
Getting the balance right is essential because there is still an appetite and need for more traditional banking services, such as access to cash. For example, Nationwide Building Society figures show that more than 30 million cash withdrawals were made in 2022. This is the first time in 13 years that there has been an increase in ATM use.
In its branch closure statement last week, NatWest acknowledged that digital banking isn’t for everyone in every situation: “When we close branches, we have to make sure that no one is left behind. We take our responsibility seriously to support the people who face challenges in moving online, so we are investing to provide them with support and alternatives that work for them.”
The financial regulator is also putting pressure on banks to ensure access to cash and other services. The UK financial services regulator will be given new powers to ensure people can still easily access and deposit cash, as the digital revolution decimates branch and ATM networks.
In May last year, the government said it would legislate for the Financial Conduct Authority (FCA) to ensure banks allow consumers to access cash and make deposits within a reasonable distance from their homes.
“To support the FCA, the government will in due course set out its expectations for a reasonable distance for people to travel when depositing and withdrawing cash,” said a statement from the Treasury at the time.
The banking industry is coming together to meet government and customer demands for a retained physical presence.
ATM network provider LINK is coordinating banking hubs, where consumers from different banks can deposit and withdraw cash. There are plans for 38 banking hubs and the same number of services for people to make deposits.
LINK CEO John Howells said: “Access to cash and face-to-face banking services continue to be important for millions of people across the UK. Not everyone can or is able to go digital yet, so we’re pleased to announce new cash services to support these communities.”
Meanwhile, Barclays has launched a project to create new “banking pods” where banking services can be accessed. The bank describes the banking pods as “purpose-built, semi-permanent structures in sites such as shopping centres and retail parks”.
The bank said at least 10 will be set up in the UK by summer 2023. To reach customers in remote locations, it also plans for six more electric vehicle banking vans to be added to its existing fleet of 10.
Jo Mayer, head of everyday banking at Barclays, said: “As visits to branches continue to fall, we need to reimagine where and how we show up to provide the best service for customers now and in the future. Our new banking pods and community pop-ups help us to tailor our in-person support for each location, including support with digital skills. In areas where we close a branch, we will maintain our presence in that community, offering an alternative face-to-face solution.”