MPs fear large sections of society could face ‘financial exclusion’
The Treasury Select Committee has been looking at ways of dealing with the fallout of mass bank branch closures, which have left large sections of society having to travel miles to their nearest branch or relying on online and mobile services which have proved vulnerable to IT failures.
The number of bank branches per million people in the UK has fallen 37% from its peak, according to a report by McKinsey, and the country has relatively fewer branches than most of its European and North American peers.
AOL News says “bank branch closures are particularly likely to affect the elderly or people on lower incomes” so “preserving a branch network, therefore, should help financial inclusion”.
“As things stand, when the last bank in an area shuts down, customers are ushered towards the nearest Post Office to do their banking,” says the BBC, “but while you can take out and deposit money and check your balance, there is no banking specialist on hand and you can't get help setting up basic transactions like direct debits”.
Furthermore, the Post Office actually makes a loss from providing limited bank services, something the Committee said should not be subsidised by tax payers.
“The Post Office is not an optimum environment for customers, particularly vulnerable ones, for banking services as staff are typically not banking specialists. Rather, the service provided is comparable to that of an ATM” says the report. “The Post Office should not be seen as a replacement for a bank branches, but a complimentary proposition where available.”
Under its proposals, the big four banks Lloyds, Barclays, HSBC and RBS would fund local hubs, which could be in post offices, but would have specially trained staff.
In fact, three of the biggest, Lloyds, NatWest and Barclays have already joined forces to provide banking hubs for small businesses in Birmingham, Manchester, Crosby, London, Leicestershire and Bristol.
The Financial Times says the hubs “which will have longer opening hours than traditional branches — will allow businesses to pay in money and cheques and exchange cash”, and comes amid rising concerns increased costs could make it too expensive for small companies to process cash.
In Scotland the deputy first minister, John Swinney, has suggested different banks take turns using the same office on alternate days.
With growing concern about branch closures and the impact of a growing cashless society, “there could be a future for the banking hubs idea if ministers can be persuaded to get behind it”, says the BBC.
This article was from The Week and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to email@example.com.
Free Newsroom email alerts
Register for daily/weekly email alerts with news from The Financial Times, Forbes, Reuters, The Economist and more.