Could sharing bank branches help save the high street?

Take a stroll down your local high street this weekend, and chances are, you’ll find that Covid-19 has hastened the demise of any remaining bank branches.

Banks have been vanishing from UK towns and cities at the rate of around 50 a month since 2015. The rise of digital banking under lockdown and precipitous decline of cash payments has made it even easier for banks to justify further closures.

The government, with all the urgency of a procrastinating snail, finally launched a consultation this month on laws that would oblige banks to provide personal and small business customers with a “reasonable” level of access to cash, although the definition of “reasonable” has yet to be hammered out. So what’s the solution?

This week I travelled to Rochford, a small market town in Essex, to see if a brand new bank on its high street could be the answer.

The Bank Hub opened its doors in April. One of two UK pilot schemes, five major banks effectively share a branch, offering walk-in appointments for existing customers. The Post Office provides a dedicated counter service for small businesses and personal banking — just like you’d get in a normal post office but much faster, as there are no queues of people returning their online shopping.

If any readers doubt the demand for cash and basic banking services in the community, I challenge you to go and spend an hour in the Rochford hub.

Community service: Cal McCall, manager of Bank Hub, and Tanya Davis, community banker with Lloyds Bank, say Rochford’s customers appreciate a face-to-face service © Claer Barrett/FT

It’s been enthusiastically received by shoppers and retailers who still lament the closure of Barclays, the last bank in town, around five years ago.

“People regularly come in and say they’ve banked with Barclays since the 1950s,” says Bank Hub manager Cal McCall. “They’re delighted that they no longer have to go to Rayleigh or Southend.”

The same goes for small business customers, who come in to get change and use the hub’s self-service cash deposit facility.

Bill, the Turkish barber across the street, boasts he can cash up without even locking his shop. Previously, he had to close early and drive to the next town.

All of this has made it much easier for Rochford’s retailers to keep taking cash payments. I couldn’t find a single shop displaying a “card payments only” sign, which is a far cry from my own neighbourhood.

Local butcher Jason Macaree is the owner of J Mac Meats, famed for its tomahawk steaks. He’s doing a roaring trade during the heatwave, and calls into the Hub most days to get change or deposit his takings.

Jason tells me about 25 per cent of his customers now pay in cash, down from over 60 per cent before lockdown, blaming unfounded fears of the virus being transmitted via banknotes. He’s previously been handed wet notes and coins that customers have washed in soapy water — a novel twist on money laundering.

Rochford’s local butcher Jason Macaree says 25 per cent of customers pay in cash, compared to around 60 per cent before Covid-19. Some have even paid him with freshly washed banknotes
Rochford’s local butcher Jason Macaree says 25 per cent of customers pay in cash, compared to around 60 per cent before Covid-19. Some have even paid him with freshly washed banknotes © Claer Barrett/FT

He and other traders are convinced the Bank Hub has boosted custom, noting that shoppers forced to travel elsewhere for face-to-face banking will inevitably spend their money there too.

Most people popping in on the day I visited were personal banking customers — the majority aged over 50, but not exclusively so — using the counter service to withdraw cash and pay bills.

Where the Bank Hub deviates from the existing Post Office tie-up is that the five banks supporting the pilot — NatWest, Lloyds, Barclays, HSBC and Santander — each host drop-in appointments in its private meeting room on a designated weekday.

Lloyds community banker Tanya Davis is on duty every Tuesday; a rare example of consistency in the modern banking world that her visitors clearly appreciate (“Hello again, Tanya!”).

“Customers love that they can come in and talk to somebody from their bank face to face,” she says.

The most common requests are help making payments or transferring money. As bank fraud spirals, many are not confident doing this online. Some don’t have smartphones; others say it takes too long to get through to telephone banking.

As well as ordering replacement debit cards and cheque books, many come in with queries on statements, which Tanya can usually resolve rapidly.

UK has one of the lowest rates of bank branches per head in Europe, Chasrts showing number of UK bank branches and bank branches per million inhabitants

While customers cannot apply for a mortgage or carry out more complex transactions, there are also clear fraud prevention benefits. Cal says people frequently pop in asking if texts purporting to be from their bank or the Royal Mail are actually real (they never are).

Natalie Ceeney, chair of the Access to Cash review and the community access pilots, hopes the shared banking model will be replicated nationwide.

The group’s research shows some 8m people in the UK are entirely dependent on cash, and Ceeney says this is highly correlated to vulnerability, age and poverty.

“If you earn less than £10,000 a year, you are 14 times more likely to be dependent on cash than if you earn more than £30,000,” she says.

Plenty of families are “managing to the penny” — especially those on zero-hours contracts with irregular incomes. Even if they have access to a free cash point, they often need to withdraw less than £10.

On the day I visited the Bank Hub, a woman came in and withdrew the last 80p in her account to buy a loaf of bread.

Similarly, many on low incomes shun monthly direct debits as they want to control when money leaves their account — evidenced by the number of customers in Rochford asking to pay bills over the counter.

‘Cash is becoming a dirty word now,’ complains market trader Jeff, who runs a stall selling greetings cards. He only takes cash as most of his wares cost £1 or less. 
‘Cash is becoming a dirty word now,’ complains market trader Jeff, who runs a stall selling greetings cards. He only takes cash as most of his wares cost £1 or less.  © Claer Barrett/FT

For small businesses, being able to deposit cash takings quickly and easily is a boon, but many are angry with the banks for upping charges under lockdown.

Jeff, who runs a market stall selling greeting cards, only takes cash as most of his wares cost £1 or less. “Cash is becoming a dirty word now,” he complains. Some of his suppliers no longer take cash payments from him, blaming increasing bank fees.

“A lot of members tell us that cash deposit and withdrawal fees are high and rising,” adds Martin McTague, vice-chair of the Federation of Small Businesses, saying this is pushing more and more retailers to go cashless.

Even if the pilot hubs are more widely adopted, it may be too late to reverse this trend. Nevertheless, adopting a shared model is the obvious way of maintaining what’s left of the UK’s cash infrastructure at a cost that the banks can jointly afford.

Rochford’s locals are aware the pilot Bank Hub could be gone by October if banks decide to abandon the experiment. “Have you heard if you can stay yet?” is a commonly asked question, Cal says. Hopefully it’s one he will soon be able to answer.

Claer Barrett is the FT’s consumer editor: claer.barrett; Twitter @Claerb; Instagram @Claerb

Click here to find out more about the FT’s Financial Literacy and Inclusion Campaign, or email financial.literacy

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