I founded the Campaign for Community Banking Services in the late nineties at the height of bank branch closure activity – many will remember the massive public and media outcry when Barclays closed nearly 200 branches on one day in April 2000—but the need for its campaigning and political lobbying skills could be even greater in the future with the fallout from the banking crisis. The Campaign is a coalition of national charities and membership organisations which share concerns about the decline in local access to banking and the damaging impact of this on financial independence, sustainability of communities, financial exclusion, carbon emissions and many other aspects of life. We help communities trying to save their banks and also research and propose alternatives to closure.
The chief executive of the country’s largest global bank, HSBC, chose its 2009 AGM to put down a marker. “The economics of running a major retail network in the UK no longer stack up” and similar sentiments could well have come from the mouths of other banking chiefs, as each of the four major groups are experiencing plunging retail profits, increased cost of capital to satisfy regulatory requirements and lots of new competition such as Tesco and Santander with fewer outlets and lower cost bases.
As a result of regrettable political and business decisions taken over many decades, and recently made worse, Britain has one of the most consolidated retail banking structures on the planet, dominated by four massive global banking groups: Barclays, HSBC, Lloyds and RBS (NatWest). Ninetyseven per cent of its thousand smaller and less well-off communities are dependent on just one of these banks and are at the mercy of financially motivated decisions taken in Canary Wharf or the City to close their ‘lifeline’ branches; decisions often unrelated to the needs of the communities concerned. On the Continent, where local and regional banks survive and thrive, the scene is very different: France and Germany have 2-3 times the branch density of the UK, where over 40% of branches have closed since 1990, and Spain has 5 times as many branches per million of population.
Why is the presence of a banking outlet so important to a community’s search for survival? At a transactional level, it helps to keep residents ‘shopping local’ and brings others in primarily to bank, but whilst there they pick up other essentials which keep local shops and services viable, with benefit to the most vulnerable: older and disabled people, those with mobility difficulties and carers.
Changing consumer behaviour has already resulted in the loss of many local services and is not peculiar to banking. The undeniable growth in usage of alternative banking method
s-ATMs, on-line, telephone, cashback - is the strongest reason why individual banks will close more branches, but also the strongest reason why the neutral shared branching option we advocate is both necessary and viable: 100% of those in the community who need a counter come through its doors and costs are shared. So, for banking, there is a solution, proven viable in UK studies and witnessed for myself earlier this year when I visited Atlanta, the nerve centre of shared branching which operates successfully throughout the United States.
Tomorrow, if the Big Four banking groups were to close their individual branches in the smallest communities where only one bank currently survives, and replace them with‘open to all’ neutral community banks, it would be largely ‘cost neutral’ for them but would earn ‘brownie points’ at a time when the banks are greatly in need of some of those. Additionally, it would give them experience of the concept, which could later be rolled out to larger communities in its more sophisticated ‘banking centre’ format with a very significant plus for their profitability. With climate
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