The closure of high street bank branches continues to outpace the establishment of new community banking hubs, despite increased regulatory powers and ongoing government reviews. Major banks like Lloyds and NatWest have recently announced further closures, adding to the hundreds already scheduled for this year and next, as they cite reduced customer footfall and a shift towards digital banking.
Since January 2015, a staggering 6,872 bank and building society branches have ceased operations across the UK, according to consumer group Which? This represents a substantial 69% reduction in the nation’s physical banking network. This year alone, 315 branches are set to close, with an additional 18 already slated for 2027, highlighting the ongoing trend.
In response to these widespread closures, community banking hubs have been introduced as a potential solution to maintain access to essential financial services. These hubs offer counter services for deposits, withdrawals, and bill payments, alongside face-to-face consultations with representatives from various banks. After a slow start, with only four hubs opening in 2021 and 2022 combined, the rollout has gained momentum. Last year saw 101 new hubs open, and another 36 have become operational so far this year, bringing the total to 240 operating across the UK. An additional 40 sites are currently in development by Cash Access UK (CAUK).
However, the pace of hub openings is still significantly behind the rate of branch closures. Millions of people now live in areas with limited or no access to physical banking services. Nearly six million individuals reside in 55 parliamentary constituencies that no longer have any bank branches, while almost 10.5 million people in another 100 constituencies are served by just a single remaining branch. This disparity has led to concerns about the creation of 'cash deserts' and the impact on vulnerable customers.
New legislation introduced in June 2023 granted the Financial Conduct Authority (FCA) powers to ensure free access to cash and to assess whether local communities are being left without essential services. While the FCA can delay branch closures, it cannot prevent them indefinitely, and banks continue to justify their decisions to shut down physical locations. The government announced a new review into face-to-face banking services in May, but its potential recommendations and timeline remain unclear.
Consumer advocates, including Which?, have called for a more aggressive expansion of banking hubs. The Labour party manifesto has committed to having 350 hubs operational by the end of this parliamentary term, with potential for further increases if more branches close. However, even this target represents a small fraction of the branches lost over the past decade, underscoring the challenge of maintaining accessible banking services across the country.