By December 2023, one in eight UK bank branches would have closed, new figures show. Almost three-fifths of the bank branch networks have vanished since 2015 and a total of 636 bank branches are due to close by the end of this year. 424 have been shut so far, according to analysis based on data from ATM provider Link.
As the year comes to a close, high-street banks are continuing to announce closures, forcing many people who rely on them to find other ways to bank. Bank branch closures in the UK peaked in 2017 when 869 branches closed at a rate of over 70 a month. 369 branches were closed in 2020 and some plans to shut branches had to be paused during the pandemic. But by the subsequent year, 735 branches closed, followed by 662 in 2022.
The closures have raised concerns that many people would now have limited access to cash. The British government addressed the problem last month, with a framework document that aims to ensure that the majority of people and businesses would have to travel not more than three miles to access cash, free of charge.
The Treasury said: “While the country is moving further away from using coins and notes with the number of online payments rising from 45 percent to 85 percent in the past 10 years, cash can still be an integral part of many businesses and people’s lives.”
The Financial Conduct Authority (FCA) can hold banks and building societies to the new rules, and has the power to fine them if they do not. Derek French, a former NatWest executive said: “For people who are less well off, they can find great difficulty in budgeting if you’re waving a phone or card and don’t get a receipt. “Cash may be declining but I do think there’s a strong case for having it as an option when you look at the population as in its entirety.”
Chris Holmes, a Conservative peer and a long-time campaigner for greater equality around access to cash said: “What point is there having access to cash if you have no place to spend it? It’s really critical that everyone understands that point, or there will be certain communities which risk being excluded.”
Sam Richardson, deputy editor of consumer rights magazine “Which? Money” said: “A closed bank branch doesn’t just mean one less place to withdraw or deposit cash locally. It also makes getting access to face-to-face banking services harder — something that is particularly important for more vulnerable customers.”
In addition to the more than 100 branches closing or closed in London this year, the cities of Southampton, Norwich, Dundee and Leeds will all lose multiple branches by the end of 2023. Seven of these hubs, which are managed by post offices, have already been launched, with more than 60 in total planned for across the UK. The hubs are funded by the banks and designed to offer “back to basics” banking for communities that have seen traditional branches disappear.
Customers are able to use the hubs, which are essentially shared bank branches, to deposit money, make withdrawals or pay utility bills. Nearly all major banks are represented at the hubs, including Adam & Co, AIB, Bank of Ireland, Bank of Scotland, Barclays, Cahoot, Coutts, Co-Operative Bank, Danske, First Direct, Halifax, Handelsbanken, HSBC, Lloyds, Metro, Nationwide, NatWest, RBS, Santander, Smile, Starling Bank, TSB, Ulster Bank and Virgin Money.
The closure of these branches will definitely throw workers back into the unemployment market. When bank branches close, it can definitely lead to job losses for workers in those branches. Government typically responds to such situations in several ways. Government may implement programmes to help affected workers acquire new skills or retrain for different roles. This can include providing funding for education or vocational training. Government often has unemployment benefit programmes in place to provide financial support to individuals who lose their jobs. These benefits can help workers to bridge the gap between jobs. Government may focus on diversifying the economy by attracting new industries or businesses to the affected areas. This can create new job opportunities for the displaced workers.
Government could also have regulatory bodies or agencies responsible for overseeing the banking industry. They might work with banks to ensure that closures are managed responsibly and with consideration for their impact on local communities and workers. In cases where bank branches are closing due to a shift towards digital banking, government may work to ensure that all citizens have access to the necessary digital tools and skills. This can help mitigate the impact on those who may be less familiar with online banking.
Government could also collaborate with local communities, non-profit organizations, and businesses to implement initiatives that support local economies and create alternative employment opportunities.