Yahoo Finance Hour round-trips and 30-minute queues as banks leave towns without cash
Lutterworth, in Leicestershire, is a typical English market town.
There is a Church Street, which leads to the 13th century parish church. A High Street, with a town hall in the neoclassical style. A Market Street, with a thatched roof, timber-framed pub and brightly painted shops. And a Bank Street – even though soon, the community will have no bank.
Lloyds, the last remaining branch in Lutterworth, will close next month. It will be the eighth bank to shut its doors in the area over the past five years.
The nearest alternative — a Nationwide branch in Blaby — is also on its way out, forcing residents to travel 12 miles to Wigston. A round trip is 50 minutes in the car. The elderly and the disabled who are unable to drive face at least double the travel time.
“At the end of this year, my constituency of over 100,000 people will be left with only two small local building society branches,” says Alberto Costa, MP for South Leicestershire.
“All of the so-called big banks and building societies, Lloyds, Barclays, Santander, HSBC and Nationwide, have simply left their customers, my constituents and local businesses, behind with little assistance and tired explanations.”
Banks have proposed a solution: banking hubs. These new mega-branches will be shared among several lenders, with a counter service run by the Post Office.
Under this model, the ten participating banks and building societies – the largest in the country – will save costs on expensive brick-and-mortar branches, while their customers will still be able to access all the bank services they would have done at their local branch.
The plan was announced last December, with ten hubs initially promised. Last week, it was announced that another 13 would be rolled out. Lutterworth was among the list of new locations.
But despite the promises, so far only the two trial hubs are currently up and running – Rochford in Essex and Cambuslang on the outskirts of Glasgow.
This has raised the question of whether hubs can effectively replace lost branches, which over five million people rely on.
The rollout of those original ten sites may be an ill omen for what is to come of the ambitious scheme.
In eight of the ten locations – Acton, Brixham, Carnoustie, Knaresborough, Syston, Troon, Welshpool, and Looe – the proposed hubs have run into obstacles, including protracted negotiations with landlords, asbestos reports, and a lack of available properties to buy.
The other two locations, Cottingham and Buckingham, are hoping to shoehorn hubs into the cramped premises of the previous bank.
“Acton was earmarked for a banking hub with great fanfare late last year and it’s still not happened,” said Dr Rupa Huq, the MP for the West London area.
“There have been delays with signing the lease on the identified site owned by a private equity company, which given there is a bit of building work and fit-out to be done, will mean they cannot promise it’ll be open this year and won’t be held to any date.”
Natalie Ceeney, chair of the Cash Action Group, which has been charged with the hub rollout, said: “Finding suitable premises is not as easy as it sounds.
“The hubs have to be secure and cater for everyone, so we need to make sure we meet building regulations, provide disabled access as well as working with smaller landlords.”
Be that as it may, the fact remains that bank branches are closing far faster than the hubs are opening.
Around 4,685 branches have closed since 2015, according to the consumer watchdog Which?, and a further 433 branches are scheduled for closure this year and next.
In Knaresborough, North Yorkshire, people are getting frustrated as they await the opening of the new hub.
“It’s rubbish because if Sainsbury’s cash machine doesn’t work and neither does Tesco, then all that’s left is the post office, and not everyone wants to stand and wait half an hour for money,” said Jessica Garland, a local resident, who was not even aware the banking hub scheme existed.
Local councillors scrutinised the slow rollout of Knaresborough’s promised banking hub at a meeting last week.
Charlotte Gale, a member of the Knaresborough Chamber of Trade & Commerce, who sits on the banking working group, said: “Just before the pandemic we lost six major banks and building societies, and their associated ATMs, in quick succession. This left us with just one branch, The Halifax, which itself closed during the pandemic. We now have just two town centre ATMs, which have sometimes struggled with reliability and to meet demand since the Halifax closed.
“Cash usage remains disproportionately high within the town, especially on Wednesday Market Day, when many surrounding shops and businesses also report an increase in cash usage. Over a quarter of Knaresborough’s population are also over 65 and many struggled with the rapid loss of face to face banking services and access to cash in the town. Businesses also struggled, both with accessing change for their tills and paying in takings.”
Problems like these are growing more acute as the cost of living crisis grips Britain. More and more people will be turning to cash to help with budgeting.
“The need for access to cash is growing,” said Siobhain McDonagh, the MP for Mitcham and Morden, who has spent the last week protesting outside one of the last banks in her south London constituency, which is winding up its business.
“The cost of living crisis has seen the return of money jars, with households separating their cash and counting out their pennies to ensure they can make ends meet.”
Where banking hubs are infeasible, at least for now, people will have to rely on a combination of free-to-use and pay-to-use ATMS. While free cash machines make up the majority of the network, a significant number of fee charging machines are found in some of Britain’s poorest neighbourhoods and communities.
“With a regular fee of £1.75 just to withdraw cash from a pay-to-use machine, it is a luxury that many cannot afford, yet [proposed legislation to protect access to cash] makes no clear commitment to protect free-to-use over pay-to-use machines,” said Kate Osamor, MP for Edmonton.
Many people access small increments of cash at a time. According to Link, which oversees the UK’s cash machine network, the average ATM withdrawal value was £78 in 2020, although the minimum amount customers can typically draw from a cash machine is around £10.
In Buckingham, which used to enjoy “excellent customer standards”, according to Greg Smith MP, bank closures are “causing significant difficulties” for residents.
Kim Davey Frankish, a local resident and carer for adults with learning disabilities, provides supported living services to a number of vulnerable people who are not given bank pin numbers as a precaution against financial abuse and fraud. As part of her work, Mrs Davey Frankish helps people access cash by driving them to their local branch.
“They always banked with Barclays and to get money out they had to sign,” she explained. “Most of the cashiers knew them, so it wasn’t much of a hassle.”
“Then, it closed. So we had to travel to Bletchley or Bicester as some of the staff had transferred there and they knew them, but if they weren’t there it became very difficult and staff could be very stroppy.”
When the Bletchley branch closed, Mrs Davey Frankish tried three times to register the people under her care for a sign-only account with the Post Office, but it never worked out, as the postal system requires every customer to have a pin number.
Some communities have been told that it will take eight months to a year to set up a hub.
The Financial Conduct Authority (FCA) is concerned by the ongoing delays. A spokesperson for the regulator said: “Firms need to pick up the pace and deliver more banking hubs. We expect this to be done as a priority.”
Over the summer, the FCA penned an open letter calling for banks to do more to protect their customers from the cost of living crisis and introduced additional consumer protection.
Under the new Financial Services and Markets Bill, which is currently making its way through parliament, the FCA will soon take on a more muscular role in ensuring access to cash across the UK.
Rocio Concha, director of policy and advocacy at Which?, said: “We would now like to see the government go even further by guaranteeing minimum levels of access to cash without fees being charged, and for the FCA to be given the powers to determine a local community’s access to cash needs."
She added: “This would mean assessing a wide range of factors, including minimum geographic distances, and holding banks to account.”
Ms Ceeney says: “I recognise that there is frustration that the Hubs aren’t opened the day or week after they’re announced, but we’re finding the communities we’re working with are patient and helping us along the way."
She added that people can expect the original ten hubs to be open within the next year.
Banks involved in the hubs project say they are committing cash to fund the development of new facilities and are willing to stump up more as new hubs are required.
Some attribute delays to administrative and regulatory hurdles that come with pooling resources.
“Where you have a number of organisations in one industry working on a shared initiative, there would be obvious and significant competition law concerns that would need to be addressed,” said a spokesman for HSBC.
In Welshpool, Wales, the last remaining bank in town, a branch of Lloyds, is due to close early next year. Richard Church, a local councillor, has requested that the bank postpone its closure until the new hub is open.
“I do not believe that the Post Office has the staff, or the space, to meet the need in the interim,” he said. “Nor do I believe that the Lloyds building is a suitable site for the banking hub as it has poor disabled access.”
The branch closure will be symbolic: the town was the birthplace of the patriarch of the Lloyds family, which gave their name to Britain’s largest bank. Where once they were growing, now banks like these are in retreat, leaving locals to feel the effects.
