Community Bank Closures

Gillian Keegan Excerpts

Thursday 8th February 2018 Commons Chamber

[Gillian Keegan (Chichester) (Con)]

It is a great honour to follow the hon. Member for Clwyd South (Susan Elan Jones), and I congratulate the hon. Member for Stoke-on-Trent North (Ruth Smeeth) and my hon. Friend the Member for Hazel Grove (Mr Wragg) on securing this debate. Technology has been used to modernise the banking sector for decades and, as an industry, banking has seized the opportunity to use technology mostly to improve the customer experience wherever possible. In the ’90s, I worked as a technology procurement manager for a bank when we were upgrading branch infrastructure. Thinking back, the introduction of the ATM network was one of the first steps away from personalised, face-to-face banking, but what would we do without them? We cannot do without them, and I could not agree more with the hon. Member for Clwyd South about how important it is, as we face changes in the banking industry, that the ATM network and free access to it is preserved throughout the country.

The revolution in FinTech has forced another change in the banking model, and our banks no longer collect the income of merchants and disburse the cash to individuals. Our behavioural patterns have changed with technology. In 1988 we had more than 20,000 bank branches in the UK, and 25% of adults were paid in cash. In many respects, cash has had its heyday. Now accounting for less than 50% of transactions, we saw an 11% decline between 2015 and 2016 alone. Cash may still be king, but its crown is slipping.

That trend is set to continue. Already 6% of the population rarely use cash. Young people, in particular, prefer digital payment methods such as card, online and mobile banking. The model of branch banking as a conduit for cash movements therefore needs to change to ensure that banks remain commercially viable.

The speed of change has surprised many communities, with the uptake of digital banking being relatively recent, and it is important that adequate notice is given when changes are made to local banking services. In 2012 at least one of our major banks had no mobile users at all, but today there are more logins a day on mobile banking than via the web. Meanwhile, the average branch bank customer goes to the bank every two or three months.

Branch closures throughout the nation are predominantly a response to declining demand. In my constituency, Barclays closed its branch in East Wittering citing a 10% fall in transactions at the branch in a single year. However, Barclays has identified 80 customers who exclusively used the branch for their banking needs. Those people need alternative provision.

When a branch closes, it is important that it gets in touch to advise customers of all the services that are available online, via telephone or via mobile banking. Many banks go beyond that and offer training and support to customers, especially the elderly and most vulnerable, to ensure that they are not excluded by the shift to digital services.

Like everybody else in this discussion, I am concerned that there is an increased risk of financial exclusion due to either a lack of digital know-how or a lack of access to the technology. Personal banking is something that many people, especially older members of our society, greatly value, and in many cases the alternatives are not suitable.

We need to ensure those customers know that the Post Office offers branch banking services for all major high street banks and can facilitate all the things that people do in a bank, including traditional cash and cheque services. That is a good alternative, as more than 98% of the population live within three miles of one of our 11,600 post offices nationwide, which makes it Europe’s biggest retail network.

The structure of community services is changing, with our traditional high street names consolidating into shared services. Becoming a community hub is important. The Post Office has managed that well in Chichester and is collaborating with retailers such as corner shops and book shops. That is a win-win for sustainability. Many Members will have been involved in debates about post office closures. We need to make sure that the network of face-to-face branch services is secured in some way, and post offices are a good alternative.

It is important that such services are well designed, as other Members have mentioned. I recently visited the new Chichester post office, which is co-located with Sussex Stationers and British Bookshops. There are seats available for those who cannot stand in a queue for long, and staff are on hand to assist people who are using self-service kiosks or who are waiting for the cashier. Needed privacy is provided. The service is similar to that provided by the old bank branches. That is the right model, but these new post offices need to be well designed, and perhaps more could be done to promote best practice in design.

The Government have made significant strides in improving both mobile and broadband coverage, with 95% of households now able to get superfast broadband. Alas, in rural areas such as my constituency, many people still suffer from areas of poor connectivity, with some areas of my constituency ranking in the worst 10% in the country. As we increasingly rely on digital banking services, blanket connectivity is becoming increasingly important. We must continue our investment in digital connectivity to mitigate the impact of branch closures and to allow people to utilise the technology of today. It is clear though that for some of the older generation, the digital era will already have passed them by. Expecting them to bank digitally is simply not realistic and in cases such as these, the post office must be advertised as the new place for local face-to-face banking. I am concerned that banks might be reticent to advertise post office banking as they may compete in some other areas.

All businesses must adapt to stay ahead of the game and the major banks are under increasing pressure to modernise their services, with new entrants disrupting banking models for businesses and individuals. FinTech firms are creating new and efficient financial platforms, offering lower prices to consumers for financial transactions. To keep up, our major banks have to move to a more customer-centric and digital model of working.

Changes in the banking sector have revolutionised how we do business and how we handle personal finances and, overall, I believe that that has been to the benefit of society. The advent of the microchip, the internet and mobile services have fundamentally altered many of our industries, and banking is no different. Banking practices have had to change to remain commercially viable and banks have had to invest in digital banking platforms, which has made life easier for most of us, but of course we must take care of those who are not willing or able use the services. These individuals must be informed of the other service providers, such as the post offices, and banks that are closing branches have a moral obligation to do that.