Thought leadership: Bank branch closures, fintech and financial inclusion

28 October, 2020Helene Panzarino

Helene Panzarino examines how the closure of bank branches and the move to online banking is affecting rural communities and people without access to digital. She reflects on changing customer relationships and looks at a possible fintech-led solution to ensure financial inclusion.

black headset on yellowI was listening to yet another news report on bank branch closures and the impact on the older, more vulnerable and lower earning members of our communities. These are people who often use cash, may still write cheques, and rely on branch staff in a convenient town centre location.

I started thinking, “Is this really true? Or is this just a minority opinion attempting to undo a majority decision?”

How the rise of fintech and digital banking has affected the high street

The way people bank has changed drastically over the last decade. Most everyday transactions are now done online.

What started with First Direct has now spawned a whole industry. The ‘bank in your pocket’ uses smart phones, tablets and laptops – 24 hours a day – to do what used to be done at a branch counter between 9am and 3.30pm. 

Yes, we’ve definitely gone online as a society, but not without consequences.

More than 3,000 banks have closed their branches since 2015. And the reduced footfall in the high street has negatively impacted neighbouring businesses and the commercial property market that houses our favourite brands.

It has also reduced the important face-to-face channel for resolving problems and customer account handling.

Customers no longer know their bankers and rarely speak with them on the phone. When they do, they’re often communicating through bots or customer call centres located in far-flung destinations.

How retail banking and customer services have changed

I grew up with relationship banking. There was something reassuring about being able to explain a circumstance – good or bad – and plead my case for time or finance when the need arose.

Crucially, I could get the rules flexed a bit to meet my individual needs as the man or woman who handled my account knew me and wanted to help.

I don’t get that feeling from an online form, or pressing buttons on a phone keypad, or sending a chatbot a message… You get the idea!

It all feels very clinical.

The shift to online or digital-only banking channels has left the less wealthy, rural populations and older generations – who may not be so tech-savvy – feeling isolated and lacking basic banking services.

This has led politicians to speak out. A recent announcement from TSB about branch closures prompted Scotland’s First Minister, Nicola Sturgeon, to urge banks to pay “very close attention” to the banking needs of rural communities.

Local authorities across the country are fighting hard to regenerate town centres and the continued loss of banking facilities worries community leaders. As many small towns and villages do not even have a post office or ATM machine the controversy will continue to cause concern for these communities.

Should banks be mandated to provide basic facilities?

Post offices, mobile banking vans, community bankers and tech support are all options to help fill the void.

There is also one new solution on the horizon in the form of OneBanks, which launches its bank-agnostic people and tech-powered kiosks in Derry in December 2020.

OneBanks is the brainchild of Duncan Cockburn – a CEO on a mission to ensure financial inclusion and accessibility to banking services in local communities.

The kiosks will be equipped with ATMs, accessible for all abilities – including hearing and sight-impaired customers. They’ll be accessed using biometrics and paid for by partner banks.

There is no doubt that the topic of appropriate access to banking services is on the minds of banks, customers and regulators. This will be an interesting space to keep an eye on in the coming year.

Helene Panzarino
Helene Panzarino is the Fintech Programme Director at LIBF's Centre for Digital Banking & Finance. Originally a Commercial Banker, Helene is an experienced fintech ‘sherpa’, programme director, exited entrepreneur, educator and author. The CEO of New Financial Laboratory, she takes community banks to the digital future by connecting them to the fintech of the present.

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