Read: Bank closures raise risk of financial exclusion
Two of the country’s biggest banks, Barclays and Lloyds Banking Group, have announced that they are closing another 63 branches across the country, following an earlier raft of closures at the beginning of 2023.
Between September this year and May next year, Barclays is closing 10 branches, Lloyds 21, Halifax 15 and Bank of Scotland 17. The closures are part of a long-running programme which saw the number of bank branches in the UK halved between 1986 to 2014.
Banks say it is a commercial response that aims to increase profitability and redirect investment as customers increasingly move online rather than visit a branch in person. Lloyds reported that across its brands more than 20 million customers regularly use online banking, and that visits to the 53 branches it is shutting have dropped by an average of 55% in the last five years. The worst hit branch that will be closed has seen footfall drop by a huge 73%.
Many customers now much prefer to do all their banking digitally but there are concerns that a section of the population – mainly the elderly, the disabled and those who do not have access to smart technology – are becoming increasingly disconnected from financial advice and from financial products that could make their lives easier or less expensive. That’s particularly the case when the very last branch in a town or village closes. The cost-of-living crisis has, in fact, seen many return to in person-banking as they try to manage their money more carefully and there are fears that closures will mean that some will miss out on the affordable credit and accessible loan schemes that banks can offer.
The Financial Conduct Authority has previously raised concerns that this could contribute to these groups’ financial exclusion. Closures also have an impact on the small businesses that use branches as their primary means of banking and on the high street as businesses could choose to move to bigger towns where branches are still operating.
There are concerns, too, about the impact of branch closures on the long term viability of the cash system. There’s been a rise in the number of people who are returning to cash as a way of managing limited budgets, withdrawing and paying in at free ATMs. For many, the use of cash is declining but there are still groups who are still dependent on it – those on low incomes, older people, those with physical or mental health issues which may remembering a pin number difficult, people who are worried about overspending, those who rely on others to do their shopping for them ad people in areas where digital connectivity is poor.
Financial exclusion is as much of a barrier to social mobility as other indicators – a lack of access to good jobs, unfair recruitment practices or poor health outcomes. It blocks opportunity. People are unable to get the right credit deals to buy their own homes or a new van for work, those who are considering starting their own business can’t access the finance to do it, families who are already struggling face a poverty premium on their bills.
The Purpose Coalition is working with businesses to break down these barriers. In particular it is partnering with Aldermore Bank and its CEO, Steven Cooper, to tackle some of the issues of financial exclusion that prevent people from getting on but is also raising them with decision makers in government and opposition to shape a more resilient future. Bank closures may not affect everyone in the same way but they do leave those who may already be disadvantaged even further away from a level playing field.
