Banks must get balance right on shutting up shop

Impact of rural branch closures must be addressed says Vicky Sheriff

One of the ways that technology has completely changed the way we run our lives is through the online banking revolution.

Managing accounts, paying bills and checking your balance are all now available instantly at the touch of a button. This is a transformation that makes banking quicker and easier for many people across the country. But the growth of online banking is one of the main reasons for the closure of branches.

Just weeks ago came the news that after more than 180 years, Airdrie Savings Bank is to close the doors of its three remaining locations. In its announcement, chief executive Rod Ashley said the bank simply wasn’t able to adapt to provide the products and services required for an “increasingly digital world”.

Across Scotland, 89 bank branches have closed since January 2015. Bank of Scotland and RBS, two of the biggest branch networks in Scotland, had by far the highest number of closures in the country, at 34 and 31 respectively.

As more banks disappear from our high streets, there is the risk that those who are dependent on these locations and the essential services they provide are forgotten and left without an alternative option. While 56 per cent of adults used online banking last year in the UK, there are still around 20 million adults that don’t use it. That number covers people who are not online, as well as those with a poor broadband connection.

Lack of branches is a bigger issue in Scotland. We know that people in rural locations only have access to one bank branch. Even if people in these areas use online banking, they may have only one broadband provider, and our research shows that around four in ten (44 per cent) households in Scotland experienced service problems in the last two years.

Given that the older generations are less likely to use online banking, it’s not surprising that some charities are concerned that journeys to the branches are getting longer for elderly people. There’s also the knock-on effect on local amenities – without a bank nearby many small businesses have moved out of the high street.

What actions can banks take? Well, if they do make the decision to close branches then it’s absolutely vital that they engage with their customers to help them find alternative ways to bank. And they should offer more support to older customers, as well as small businesses that need to bank cash takings.

A recent review into the industry’s management of closures found that the current approach by the banks to address the impact on local communities is effective to some extent but significant improvements could be made in a number of areas.

The banks say they’ll have specially trained staff to help find alternatives, and will support elderly and vulnerable customers – all of which is essential.

It is a difficult balancing act for banks – on the one hand they must adapt to the appetite of customers who want to use internet banking, but they also need to ensure that a service remains in place for those who need to use in person.

But the banks do have a responsibility to consider the interests of local communities when they are deciding which branches to close and the impact that this will have on people’s lives.

There are some examples of existing good practice to counter the effects of closures, such as RBS’S mobile branch banking service that allows those in rural or semi-rural communities to carry out several vital personal banking transactions including cashing cheques and paying bills.

However, banks in Scotland can and must do a better job of working with their customers. They need to consider the impact that changes to services will have, particularly in rural areas where closures leave elderly people with lengthy journeys to an alternative branch and where poor broadband speeds make it a challenge to bank online. l Vickie Sheriff is director of campaigns and communications at Which?