/ Money

Do you still need your local bank branch?

Bank signs

As talks take place about how to deal with closing bank branches, it might be wise to think about how you do your banking. Will you need to adjust your banking habits?

For many of us, a bank branch is part of the backbone of the local high street. My own beloved Deptford High Street has been the home of some of the banking industry’s biggest names over the years – along with what is surely South London’s greatest burger van.

But with changes to what we have regarded as ‘typical’ in high street life – the butcher, the baker etc – the local bank branch is now under threat. Back in 1990, there were 17,991 branches on the high streets. Over the years we’ve seen their numbers fall and by April 2015 another 142 will close, leaving just 9,081 in the UK. This will undoubtedly raise concerns for smaller communities who may lose their face-to-face banking service.

Vince Cable is currently in discussions with the banking industry and us at Which? about how best to manage the decline in branch banking. The question is, if branches close, how will people access physical banking services?

Changes in banking habits

It is undeniable that people use branches less, with some banks reporting footfall declines of up to 30% over four years. Lloyds for example gave up on its pledge to keep its branches open wherever it was the ‘last bank in town’, blaming a faster than expected fall in usage.

This is partly driven by developments in personal banking, such as telephone, online and mobile banking, which for many make the local branch less of a lifeline than it once was. Royal Bank of Scotland recently claimed that its most popular branch was the 7.15am to Paddington because so many people use its mobile banking app. Banks also point to the role of the Post Office in providing an alternative to branches.

Looking after all customers

Yet, there’s no denying that online and mobile alternatives aren’t for everyone, while the information provided by banks over the phone has repeatedly been shown to be patchy at best.

Inevitably, there will always be customers who want to do their banking face-to-face with many of those who value their local branch being people who simply aren’t comfortable conducting essential financial transactions online.

We don’t think banks should leave their customers high and dry when branches close. Banks must keep their promise to maintain vital banking services for all, particularly for the most vulnerable. We’ll continue to make sure your voices are heard by the Government, industry and regulator.

Do you still use your local branch? If it was to close, what alternative banking facility would you like to see?

Comments
Member

I visit my branch to pay in cheques. Usually I just put them in an envelope with the paying-in slips and post it through the door when I’m passing.

It is comforting to know that if I had a problem I could talk face-to-face, rather than have to deal with a call centre.

I can understand why banks are closing branches but in the same way they share cash dispensers, perhaps they could find a way of running a branch that served all the main banks. For many years the Midland bank on the campus of the university where I work did offer some shared services. The university had made this a requirement and it worked well.

Member

Oops. That should read where I worked, not work. The branch has long gone, but the idea of shared services was well liked at the time.

Member

The last time I received a cheque, I paid it in using the Barclays Mobile Banking app, just by taking a photo of the cheque with the app. Hopefully this will become widespread so that those who insist on using this archaic method of payment no longer create such an unreasonably onerous task for the payee.

Member

NFH, what would you replace the cheque with for the many you don’t use online banking?

Member

I’m certainly keen to pay in cheques online, NFH. You did mention this before.

Member

Malcolm, I didn’t say that cheques should be replaced, but that we should have a non-onerous way of depositing cheques. Receiving a cheque is a real pain, unless one can deposit it with a mobile app.

Now you come to mention it, I do believe that cheques should be abolished, but that’s another topic.

Member

Well at the risk of being contrary, I am very happy to receive cheques of any amount and at any frequency. I find they lead to an enormous improvement of my relationship with my bank.

Member

John, don’t forget why many organisations issue cheques instead of bank transfers. I can’t find the statistic, but a huge proportion of cheques issued are never deposited because the payee finds it too onerous; time is money. No business, especially a large one, should be issuing cheques in this day and age. It is a disingenuous practice, designed only to reduce an business’s outgoings based on the statistical likelihood of payees not bothering to deposit them.

Member

I agree with you on commercial cheques. Most of the payments I receive go straight into my bank account [and straight out again it seems some months!] but there are all sorts of miscellaneous personal cheques that have to be paid in and I am diligent about doing it. ERNIE occasionally favours me with a paltry win which has to be paid in, and from time to time I organise dinners where people have to cough up their portion and they usually give me a cheque – and then I have to send a cheque to that night’s chosen charity. I use quite a few cheques each year to pay independent tradesmen where the amount involved is more than you would normally have in cash; the central heating engineer needs a cheque for the annual service and I’m always sending off for books and music from odd companies who I don’t necessarily want to have my card details. So, in my case, the need for cheques shows no sign of diminishing at the moment. Luckily, because nobody can think of a practical alternative, they will be around for longer than me I expect.

Member
ACDL-W says:
13 February 2015

I agree

Member

John, none of the scenarios that you have quoted requires cheques; bank transfers (or Paym or Barclays Pingit) would be more suitable.

1. Premium Bond winnings are credited automatically to my bank account. Why would I want to receive an onerous cheque?
2. If I need to pay a tradesman, why would he want to receive an onerous cheque that he has to take to the bank, rather than a bank transfer before he leaves my home?
3. If people owe you money for dinners, then why can’t they do a bank transfer?

Most use of cheques is through stubbornness and aversion to change or modernisation rather than a lack of a suitable alternative.

Living in London, I know a lot of foreigners who have settled in the UK. None of them have ever used a cheque and they can’t understand why British banks issue them with a chequebook. In other countries, cheques are unheard of except for something that one’s grandparents used to talk about. Why do we in the UK, unlike other European countries, need to hold on to this archaic form of payment?

Member

NFH, agreed there are many occasions when alternative methods od payment to cheques can be used. Hiowever, I think you may be overlooking the many people who do not use mobiles or PCs for online banking – either from choice or lack of ability. I. am neither stubborn, averse to change nor “modernisation” yet still find uses for cheques – like many others on this and the previous conversation. The proposed removal of cheques was overturned by a clear need. As they are here to stay we should now be concentrating on improving the current system or finding an alternative with similar benefits.

Member

I hope it catches on too. It virtually removes the final reason for me having to visit a bank ever again.

Member

Well said Malcolm. It’s vital that companies cater for all their customers and as I see it, there is still a clear need for banks to provide convenient branches. For many years, customers of different banks have been able to use the same cash dispenser, which is convenient for the public and presumably acceptable to the banks.

Bank branches offering shared services could be the way forward to provide local banking facilities while minimising the costs for individual banks. I would also like to see shared depots for collection of undelivered parcels, but that’s more appropriate for another Conversation.

Member

Can anyone explain why the UK needs to retain the cheque system, whereas other European countries abolished cheques years ago? What is different about the UK that necessitates this archaic form of payment? I keep hearing about old people, charities and tradesmen but these all exist in other European countries where there are no cheques.

If we were talking about the US, then there would be a reason. Unlike most developed countries, the US has no high volume system for low value payments, such as FPS or BACS in the UK. Therefore the US banking system relies heavily on cheques, and if you send a payment by online banking in the US, your bank sends a cheque in the post to the payee! But what is unique about the UK, compared to the rest of Europe, that necessitates the retention of this archaic form of payment?

Member

NFH – We have discussed this on numerous occasions and I have given you a very good example of why we need cheques. Others have given different reasons, including the fact that they WANT to use cheques. I don’t know how small charities manage without cheques in other countries, but it’s irrelevant because there is no doubt we need them here for the foreseeable future. Small traders often ASK me to pay by cheque even if I offer to make an electronic payment.

It is not reasonable to expect people to carry around a lot of cash, certainly in some parts of the country.

Member

This still doesn’t explain what is unique about the UK that necessitates cheques which doesn’t exist in other European countries. I think it’s down to stubbornness and a reluctance to embrace modernisation.

Member

Perhaps those in the UK are good at rejecting what we are asked/told is the best way forward. A relevant example is of course the decision that cheques still have a place in financial transactions.

Many of us don’t have a lot of faith in the banking sector and if cheques are withdrawn, that will not do anything to generate trust.

Member

I read that Europe uses a Giro system still – is that true? These are still paper-based payments. Naturally all such methods are declining because of debit and credit cards and online banking, but there seems to be a residual need amongst a significant number of people who do not, or cannot, use electronic systems. How do we cater for them?

Member

At the moment, I’d say use online banking. You can use it from your smartphone and soon pay cheques in with it too.

Member

terfar, this ovelooks all those people who don’t have smartphones or don’t, for whatever reason, have the facilities or wish to use electronic banking. Do we abandon them? Why should we?

Member

You won’t be abandoned completely, but you may have to travel a fair way to find a high street branch of your bank.

Banks have invested heavily in home and mobile banking because it saves them millions in bank staff and maintaining real estate. A relatively small branch with just 5 staff may cost well in excess of a million a year to run (wages, rip-off rent and rates). So they will no longer be interested in providing free banking in every little town or village: they move with the times. Business is cutthroat and it is their bottom line profits that matter.

So there will be a few high street banks that you will still be able to use, but they will become few and far between in order to cut costs. The majority of people are more than happy to use home banking and cash machines. I don’t see that trend being reversed.

Member

One of the reasons that I put my cheques and paying-in slips in an envelope and deposit it in the letterbox is that I’m fed-up waiting in a queue. There is plenty of demand for banking services round here.

I always use online banking for preference but I have to deal many cheques on behalf of a charity.

Perhaps pay the banks’ senior staff a bit less and we might manage to keep more of our branches.

Member

But why won’t small traders accept electronic payment? They simply give an invoice (which includes their bank details) and you pay electronically using the invoice number as the payment reference. The money will be in their account before they get home. Then both the payer and payee have a permanent record of the transaction. It’s just a luddite attitude to demand a cheque.

Member

I haven’t the faintest idea why they want me to pay by cheque. I ask if they would like me to make an electronic payment, card or cheque and some of them opt for the cheque.

One success has been the local branch of a well known print and copy shop, which will now accept electronic payments. They still don’t accept credit or debit cards.

That reminds me that I should order a new cheque book because I’ve sent in an order to a small local company and might need to pay them by cheque. I don’t mind because they have not increased their price for years. If loyalty still exists in business, it seems to be with small companies.

Member

A new chequebook? How many chequebooks do you get through? Mine is so old that the year is prefixed with “19”. The only cheques I’ve had to write since the 1990s have been to the DVLA to pay the £80 fee to transfer number plates. For some strange reason it’s the only method of payment they accept for this process.

Member

Having chequed, I have on started in 2006 and one started in 2013. I don’t use a lot of cheques.

That means I have no need to order a cheque book but I do need another paying-in book. It’s convenient to order one online rather than going to the branch. When I was a student I had to go to my branch and wait for a cheque book to be printed and I there were no pre-printed paying-in books.

Member

I don’t understand why UK banks issues chequebooks for free, given the high cost of operating the cheque processing system. There should be a charge both on the cheque writer and on the cheque depositor. Otherwise the majority who don’t use cheques are subsidising the minority who do.

Member

I don’t see the problem. Those who have no need of branch services can use banks that do not offer them. Those who need these services or would prefer to use them can use banks that provide them. It’s as simple as that. I encourage friends to try electronic banking, because it is easy.

Thankfully those who run our high street banks recognise that different customers are looking for different things in personal banking. In general, companies are there to serve their customers and not the other way round.

Member

France still has cheques, and for example the tax office there accepts cheques. I don’t know about other European countries.

Member
Carol Grundy says:
20 February 2018

Shared services on our hight streets seems an excellent idea.

Member

It seems to be what the agreement between all the banks and the Post Office has produced. I haven’y had to use the service, so no first hand experience, as both my banks have accessible branches..

Member

We have created this situation by using on-line banking, credit and debits cards, direct debits, over the years and on the positive side, for many of us, has produced a far more convenient service. We rarely use our local branch – cash machine handles notes out and cheques in and our laptop does most of the rest. However, there are odd occasions when a face-to-face discussion is invaluable, as when resolving a difficulty, looking at best ways to securely transfer a large amount, talking about the pros and cons of a new account, and depositing substantial cash funds (rather than dropping it in a drawer). I support the shared-facilities idea (although the Post Office offers a partial service) particularly where you could book an appointment with a bank official.