Digital banking is changing the high street forever as banks close branches and alternatives open

The spate of bank branch closures in recent weeks is no surprise given that banks have invested heavily in digital banking, but the recent surge in the use of cash highlights the importance of finding a balance.

NatWest said last week it would close 23 branches in England and Wales over the next six months, while Lloyds Banking Group recently announced it would close 40 branches.

Branch closure announcements by banks are inevitably accompanied by statements that customers are moving to digital channels and branch footfalls are declining rapidly.

The latest closing announcement was no exception. NatWest said in a statement: “Like many industries, the majority of our customers are migrating to mobile and online banking because it’s faster and easier for people to manage their financial lives.”

Meanwhile, Lloyds Banking Group said the number of people visiting branches is falling and that while branches are important, they need to be “in the right places, where they are well utilised”.

Getting the balance The right is essential because there is still an appetite and need for more traditional banking services such as access to cash. For example, figures from Nationwide Building Society show that in 2022 more than 30 million cash withdrawals were made. ATM usage increased for the first time in 13 years.

In its branch closure statement last week, NatWest acknowledged that digital banking is not for everyone in every situation: “When we close branches, we need to make sure no one is left behind. We take our responsibility to support people who face challenges navigating online seriously, so we’re investing in providing support and options that work for them.”

The financial regulator is also pressuring banks to ensure access to cash and other services. The UK’s financial services regulator will be given new powers to ensure people can still easily access and deposit cash, as the digital revolution destroys branch and ATM networks.

In May last year, the government said it would legislate for the Financial Conduct Authority (FCA). Ensure that banks allow customers to access and deposit cash within a reasonable distance from their homes.

“To support the FCA, the Government will set out in due course its expectations for a reasonable distance for people to travel when depositing and withdrawing cash,” a statement from the Treasury said at the time.

The banking industry is coming together to meet the demands of governments and customers.

ATM network provider LINK is coordinating the banking hub, where customers of various banks can deposit and withdraw cash. There are 38 banking hubs and the same number of services planned for people to make deposits

LINK CEO John Howells said: “Access to cash and face-to-face banking services is vital for millions of people across the UK. Not everyone can or is digital yet, so we’re excited to announce new cash services to support these communities.”

Meanwhile, Barclays has launched a project to create new “banking pods” where banking services can be accessed. The bank describes banking pods as “purpose-built, semi-permanent structures in sites such as shopping centers and retail parks”.

The bank said at least 10 will be in place in the UK by the summer of 2023. To reach customers in remote locations, it plans to add 6 more electric vehicle banking vans to its existing fleet of 10.

Joe Mayer, head of everyday banking at Barclays, said: “With visits to branches falling, we need to rethink where and how we are present to best serve customers now and in the future. Our new banking pods and community pop-ups help us create personalized support for each location, including support with digital skills. In areas where we close a branch, we will maintain our presence in that community, offering an alternative face-to-face solution.”

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