/ Money

Are local bank branches doomed?

A new report on banking published this week suggests that the day of the bank branch is coming to an end. But as we look set to lose half of the nation’s branches, can we really say we’ll miss them?

The report from Jones Lang LaSalle predicts that ‘the age of the big branch legacy network in developed world countries is drawing to a close… as many as 50% of branches in networks may be declared obsolete in their current form by the decade’s end’.

The reasons behind the dramatic number of bank branch closures are varied, but internet banking is at the top of the list. After all, if you bank online, do you really need a branch in the high street? In which case, does it matter if they’re sold off to pizza chains or coffee shops (as so many seem to have been)?

Cutting back branches

In the UK, we’ve already seen a significant number of branch closures. They’ve been happening for years and look certain to continue. The Campaign for Banking Services, which has been monitoring the decline, predicts that the total number of branches in the UK will fall from 9,550 today to 8,000 in 2018.

Although several banks such as Barclays, LloydsTSB and RBS have promised not to close the ‘last bank in town’ (or at least within four miles of it), HSBC has not joined them and is expected to close at least 47 branches this year.

Which? Conversation commenter Pickle told us she was sold on the value of bank branches:

‘My high street branch is VITAL. Internet banking is all very well, but has its snags – what if my internet service goes down, what if my computer packs up,  what if I have a power cut?’

New branches growing

In London and the South East, new banks such as Metro are bucking the trend by opening extra branches. But what about the rest of the country? For me, Marks and Spencer seems to be the shape of things to come, as it recently announced plans to open 50 in-store banks over the next two years.

Commenter William admitted he wasn’t convinced:

‘Well I for one won’t be tempted to switch to an M&S bank as I don’t see it as being any different from all the rest. Having a bank effectively split, I can foresee emails exchanges along the lines of “it’s not our problem”, “oh yes it is”, “oh no its not”, and the only loser in that scenario is the customer.’

The Co-operative Bank is another provider that’s expanding. Having announced a deal with LloydsTSB to take over 630 of its branches, it will soon have 10% of the UK market (900 branches).

Bashing banks is an easy sport, but I have to admit I’d be sorry if high street branches totally disappeared! But would you miss your local branch? Is it within easy walking distance? And when was the last time you visited?


Last time I visited a bank branch was about 6 months – 9 months ago. I must admit I hate being made to wait to speak someone, just because they could only be bothered to have one out of 3 tills staffed. Even though having no bank branches wouldn’t unduly affect me, there are I’m sure millions in this country who rely on them. And as more banking scandals are exposed and those revenue streams are closed I’m sure the banks will take the short sighted view of closing more branches. Sadly, and I’ve mentioned this on other convo’s, most companies operating in this country are only interested in making money and not providing a service.

Hopefully a reduction in bank branches will encourage a further decline in the use of cheques, which are still unreasonably used by many businesses as their default method for outgoing payments. I am fed up with businesses who owe me money insisting on sending me a cheque, which causes me unnecessary inconvenience in having to visit a bank branch to deposit it.

Sadly, reducing the number of bank branches would have no effect on the companies that send out cheques, in fact it may well encourage more to do so, if they can see extra interest on money they’ve paid up just because it could take longer to pay a cheque in. I wonder if we’re allowed to start charging an admin fee for our time and effort in finding an open branch and paying in a cheque, now that might help reduce the number of cheques being issued.

The phasing out of cheques has been debated extensively, including on Which? Conversation. They cannot sensibly be phased out until a suitable alternative is provided. Business might survive without them, but they are essential for many charities. You can choose which businesses you deal with, nfh, but please spare a thought for charities even if you have no personal involvement. I work for a charity and would rather handle cheques than hundreds of pounds of assorted cash, but both are extremely welcome. It would be nice to get more standing orders and bank transfers, but those represent a relatively minor contribution to the funds I deal with.

Charities can accept bank transfers; cheques are no longer necessary. Bank tranfers can be initiated online, by telephone, or by person in a branch (for those who still insist on branch banking). Cheques are unnecessary and an unreasonable burden on the recipient.

I am well aware of this, nfh, and the charity that I’m involved in has been encouraging this for years. However, most of the donations that I process are cash and some are cheques. You do what you want, but please accept that cheques are very important to charities. There are a couple of Which? Conversations where this is made abundantly clear. I give a lot of my time to a charity and so does our treasurer, who is happy to process any number of cheques, Gift Aid forms, etc.

It is not necessary to visit a branch every time you want to pay in a cheque. I have been paying cheques into my bank account by post for years and I think most banks have this facility. Nevertheless, I would be very sorry if any of the major banks embarked on large-scale branch closures. It is frequently necessary [and usually more effective] to speak to someone over a transactional matter than try to wrangle it over the phone, on-line or by post – especially if documentation is involved. Obviously, the internet has led to a big reduction in the number of cheques and cash withdrawals being handled by branches but they still fulfill a major role in cash-handling and general banking for the local traders. I still issue a surprising number of cheques a year for things ordered by post, various commercial payments, balancing payments to utilities, and so on. Many of these could be done through interbank transfers but I have experienced reconcilaition problems in the past and the denial of receipts clearly debited from my account. Charities, small businesses, holiday homes to let, and numerous other concerns could not function without cheques [or an effective substitute if such can be devised] and where there are cheques there should be bank branches.

I don’t receive many cheques nowadays. There is usually a queue at my bank (showing that there is still a demand) so I just pop an envelope in their letterbox, saving postage. The branch is conveniently located and I don’t have to make a special journey.

Those who continue to use branches to deposit cheques should pay for the privilege; it’s an unnecessary waste of resources. Any account holder who can receive a cheque can also receive a bank transfer. Similarly any account holder who can issue a cheque can also send a bank transfer. It makes no difference whether the account holder is an individual, a business or a charity. Other countries’ banking systems function perfectly without cheques. Cheques are no longer necessary and branches should not be kept open in order to process them.

Have a look at this Conversation and earlier ones on this site: https://conversation.which.co.uk/money/cheques-saved-by-payments-council/

If you wish, you can refuse to deal with any organisation that uses cheques. Just let charities, which are major users of cheques, get on with doing their job. Let’s say that you want to buy a copy of a book produced by our society or an archive video when we have a stall in a gazebo at a village show. Cash or cheque are the only sensible choices. Obviously it’s different for larger charities with shops.

Think of other people and not just yourself. I would like to make it clear that I never write cheques unless I am asked to.

Hold on a minute, nfh! To say that “any account holder who can issue a cheque can also send a bank transfer” is a sweeping generalisation. There are millions of people who can write out cheques and pop them in the post [or get a friend or neighbour to do so] but they have no means whatsoever of making a bank transfer without physically going into a bank.

I realise that banking has to be commercially viable but there is no need to discard all its public service traditions. I for one am quite happy to see smaller bank branches survive even if they have to be cross-subsidised by more profitable ones. The notion that customers would benefit from a major closure programme instead of the shareholders is curious to say the least.

About 2 weeks ago, I visited

Sophie Gilbert says:
18 July 2012

I thought for a long time about switching from RBS (for ethical reasons only), but one of the reasons why I didn’t switched to the Co-op is precisely its lack of branches. I knew there was only one in Scotland, in Glasgow, and I stay in Edinburgh. I wasn’t aware that Britannia is “part of the Co-operative Group”, but that would have added only three to the total of branches in Scotland. Not good enough, sorry, so I switched to Nationwide because at least it has a branch convenient to me in the centre of Edinburgh, and many more in the country (Scotland).

I visited my Nationwide branch last weekend (just for a couple of transactions and a couple of questions to ask) and the weekend before I visited my RBS branch (I switched bank for all my main transactions, but I didn’t close my RBS account) and also my Northern Rock branch precisely because there was a problem with internet banking (as per Pickle’s comment), and I wanted to speak to someone face to face to try and solve the problem (it worked). Stuff the phone and the internet as far as I’m concerned, ultimately nothing replaces the human in front of you.

Well said, Sophie. And where else in July would someone remind you to get your winter sports insurance?

Alan W says:
20 July 2012

OK, cheques are either a convenience or a pain depending on your practice or prejudice. Anyone remember cash? If someone gives me a handful of folding money (yes, it has happened, but not often enough), what am I supposed to do with it? Stow it under my mattress? I need somewhere where I can pay it in to my account.

I did my banking for years with Smile (Coop) and never wrote a cheque – cheques received were paid in by post and cash at my local post office. Now I have changed banks I find the only problem is cash – does not happen often but recently I was paid a large amount in cash. Unless your bank has an arrangement with the post office what do you do with it?

Maggie says:
24 July 2012

I have yet to find a better alternative to sorting problems than face to face communication so long may the bank branches live on

Jastan says:
24 July 2012

Because the business sector plays fast and loose with cheques is not a reason to abandon them. The business sector needs to become more ethical and adopt good practice. There is still a role for cheques.

I queued yesterday at our local Halifax branch because I needed to withdraw cash above the limit allowed through the cash machine. If there are to be fewer branches, the banks/building societies will need to resolve this for people who can no longer access a branch. A possible solution could be to notify the bank in advance of what sum is required and when, so that the account will allow that specific larger withdrawal from a cash machine. This assumes, of course, that the amount of money available via cash machines will be increased anyway, to allow for closure of local branches! I realise that cutting costs and increasing profits are the main reasons behind the possible reduction of the number of high street branches but, as usual, the banks are missing the point; we allow them to hold and administer our money; in return they owe us the service we need and require, especially as we do pay for it. If their service to us is reduced, will bank charges (hidden or not) reduce proportionally? I suspect not!

brat673 says:
20 September 2012

Sadly banks aren’t in the correct place , but there is a solution if we all use it. Your local Post Office! You must use it or loose it. Most banks now allow you to do some tranactions there. Hsbc customers will be able to use Post Offices from next April. Do you know Post Offices are only paid on the transactions they do? So the only way to prevent them declining, like the small bank branches, is to Use Them! Sadly successive Governments of both colours have have said they support local Post Offices and then various ministries have stopped allowing access to their services there. Two faced politicians? Culprits- DVLA , National Savings BBC and others.

The Post Office in my area is a cross between a geriatrics meeting point and a branch of the Social Services. Time appears to be of little consequence to many of the users. I know that Bank queues are awful but at least you do not have to listen to people discussing their latest ailment or asking the staff to help them key in their [usually loudly announced] Pin number. Furthermore, over many years I have found Bank staff have generally been much more pleasant in their manner than their state employed equivalents in the Post Office.