Money Box Live: The Future of Banking

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1:06Hello, welcome back to a new series of the Moneybox Live podcast. Today, as even more bank branches close, how are communities coping and what comes next? Well, being of an age, you need them all the time. I'm nearly 80, so I have to make a day where I can get to town. It's just so difficult. It was really, really handy. More from the people of Penkith in just a moment. The number of bank and building society branches has dropped dramatically over the last decade. Around 6 ,700 have closed since the beginning of 2015. That's according to which. And just this week, we've seen branches close in Birmingham, Colville and Aberdaer.

1:47Now the government is carrying out a review into access to face-to-face banking. So what is the future of banking and what do all these changes mean for you? Do you ever need a branch or are you completely online? Maybe you've used one of the alternatives like a hub. Now, before we meet today's expert guests, I have been out to Penkith in Warrington to a square that saw its last bank branch close a few years ago to find out how they've coped with the loss. Do you remember when that was a bank? Yes, my mum used to actually work at that bank. Oh, really? Do you miss having a bank branch there? Not particularly.

2:22I think because I'm of an age in my 30s where a lot of it's online, I get by and I cope really well. But on the occasion, a couple of years ago, there was some fraud on my bank account and that was a pain because then I did have to go into town because that seemed to be the only one. So most of the time, no, but when you need it, yeah, I do miss it. So did you use it when it was a bank? Only for the cash machine. Where do you go to find a cash machine now? Well, that one's just closed down and that had one. And so now it needs to be over on the main road. It'll be about half a mile away. So a bit more of a walk.

3:01Yeah, it is really, yeah, yeah. Well, being of an age, you need them all the time. I'm nearly 80, so I have to make a day where I can get to town. It's just so difficult. It was really, really handy. Where do you go instead? Online. Ah, so that's what they want you to do? Yeah, test the SNAP. As I've got older, I use internet banking more, so it's become less of an issue for me. there's only certain occasions where I need to go into the bank. It was just sort of so convenient that everything was there and they kind of knew you, your face, and that's just really nice and that's kind of missing these days.

3:34I actually work here in the library, which is on the square, and it's all part of the sort of local community. I think banks were part of that as well. You're pushing your baby around here, who's very pretty. Hello. Do you think that bank branches will still be around in the same way once she's old enough to be banking? Probably not, because we've opened up a bank account for her and that was literally all done online. I remember when my mum and dad got me my first bank account, I think we went in and signed up with paper and stuff like that. But no, hers was just all on and off. Well, listening to that are today's experts.

4:07I'm joined by Charles Randall, a member of the Financial Inclusion Commission, which is an independent body of experts from financial services, business, charities and parliament. And Charles, you're also a former chair of the Financial Conduct Authority. Welcome. Hello. Thank you very much for listening. Good to have you with us. Penkith is just one small place, but what's happening there is happening across the UK. What are we seeing in terms of bank closures? Well, we've seen an enormous number of bank closures in the last 10 years. You referenced the figure of nearly 7 ,000 in the UK since 2015.

4:37And that's over two thirds of the bank branches that we had at the beginning of that period. So bank branches are closing. I think the speed of the closures is slightly slowing now but we see particularly in former small market towns and so on a real issue for face-to-face access. And a few people there mentioned cash machines as well. Quite often when a bank closes the cash machine goes as well. Yes there is now as a result of government legislation a duty on the FCA to secure access to cash. And they do that through ensuring that Link, the provider of cash machine services, provides a reasonable geographic spread of machines across the country.

5:21So I think that bit of it has been very substantially solved by legislation. What the legislation doesn't do, of course, is give you an entitlement to face-to-face banking services. Well, let's get into that with our other expert guest today. Joining us is Gareth Oakley, the CEO of Cash Access UK. Gareth, hello. Good afternoon. So this is a not-for-profit company. It's funded by the major high street banks and it provides cash and basic banking services like shared banking hubs. Tell us a bit more about what you're doing in response to these closures and why we're seeing so many branches grow.

5:54Yeah, so our responsibility is to put shared banking facilities into towns and that typically happens when the last bank in town closes. So an assessment is undertaken and if it's deemed that there is a need for some type of physical cash service then that's where we we step in we've built 240 banking hubs so far there have been 280 recommended so we're we're a long way through the list of communities that are expecting a banking hub and they've proven to be very very popular so far nine in ten people who use a banking hub are actively recommending them to their friends and family. Well, we'll talk more about the hubs and other alternatives shortly.

6:38But can you explain what happens when a bank or a building society decides to close a branch? Because the regulator, the FCA, does have rules, doesn't it, about notice periods, about protecting vulnerable customers. What is it that banks have to consider? So anytime a bank decides to close a particular branch, there's a long consultation period with the FCA, where there is an element of not necessarily justification because everyone can see that most of us are now banking online. But it's more important than it's about what services are left behind, how are they communicating with their customers, and what sort of mitigation there is, particularly for those customers that are vulnerable.

7:20UK Finance, in fact, which represents the banks, told us that the way people choose to bank is changing around 90 % of customers now use mobile, online or telephone services. But Charles, the government has commissioned an independent review. It's going to be led by Richard Lloyd, the former witch boss. And it's looking at how the changes to bank branches are affecting people and communities. What kind of issues should it be considering? Well, I think it's probably mainly going to consider the issue of access to banking services rather than the important social role that a bank branch can play in a small town.

7:56I saw that myself when I was FCA chair. I would go and visit groups of users like, for example, hill farmers in West Wales who had lost a really important focal point of their lives when the bank branch closed. But I don't think it's probably within Richard's scope to look at that. He'll be looking at how can the actual services of banking be provided and what are the real needs there? Gareth, there is an important point with this, isn't there? The government surely wouldn't be commissioning a report. The people of Penkith wouldn't be worrying if the rollout of alternatives like banking hubs had been a smooth transition.

8:31Clearly, a lot of people are finding they are being left behind. Well, I think that's really what the review will try to establish. Are people being left behind? They don't review healthy sectors, do they? Well, I mean, what we have seen is that the access to cash legislation, which is really where banking hubs have come from, has been hugely successful. And what we can see is that the voluntary element, which is that the banks are providing face-to-face advisory facilities in these banking hubs, has also been very, very well used. And I think what we can all see is that there are some people where digital is not an option.

9:13and then really what I think the review will do is try to say how many of these people are there in the country and what should be done about that. Now, banking hubs are clearly a really important part of their solution but I think there are probably other things that need to be considered as well. We'll consider some of them, I think, in the next 20 minutes or so. But looking at the emails that you are sending us, this review couldn't be more important. So don't miss Saturday's Moneybox when Paul Lewis will be talking to Richard Lloyd, who's going to lead that independent review. If you've got questions or comments that you would like us to put to him, please do email them.

9:47It's moneybox at bbc.co.uk. Now, those people in Penkith, some of them had to get a bus to visit a branch. What if you live somewhere more remote and a closure means you really struggle for alternatives? Well, Vanessa Langley is a community councillor on the islands of Uist in the Outer Hebrides off the west coast of Scotland. She and others have been campaigning to keep their bank branch open. For people who don't know, the islands of Uist are five islands joined together by causeways. We are the most remote outcrop of the UK along its western flank. Now, the Royal Bank of Scotland in Balabanic is due to close in a week, and we are desperate to keep this bank open.

10:32We operate a lot of cash within our economy. We have island economies which are micro economies. We have, for example, honesty sheds and honesty boxes, which need cash. And we need those in-branch services as well, because we need to be able to take identity in. We need to operate enduring powers of attorney, et cetera, et cetera. Our next branch is going to be a nearly two-hour ferry ride over to the Isle of Skye. we want to have a moratorium on our bank closure until Richard Lloyd has reported back to Parliament in October. We are just feeling very, very disillusioned, all right, by the lack of response and, to be honest, the indifference that is being shown to us.

11:18Vanessa, thank you for speaking to Moneybox. A two-hour ferry ride is quite an ask, isn't it? Well, a Bank of Scotland spokesperson told us those customers can use its new cash deposit and withdrawal machine, they can visit a pay point location and they can bank at the post office all alongside banking over the phone through their app and online. And they said they had visited the area to understand how the closure could affect the community. Charles, what do you think of Vanessa's suggestion then that there shouldn't be any more branches closed until we hear the results of that review in the autumn?

11:50Well, I think it's understandable that the loss of a banking branch is an enormously emotional moment for a community. But there are other alternatives available and post office services is one of the options. One of the reasons why I think this review is so timely is that the framework which provides post office banking services is up for renegotiation in a couple of years' time. It expires in 2030. And we need to know how much are the banks going to commit to supporting the post office branch network for banking services and also where hubs are necessary. How many hubs do we actually need? The Labour government's committed to 350.

12:34But is that enough? And I think those are the key questions for Richard Lloyd. Lots to think about. Let's hear from Kenneth next. He's 83. He lives in the Scottish Highlands. There used to be five banks within 10 miles of where he lives. Now the nearest branch is 27 miles away. But despite that, he thinks it's unrealistic for banks to keep branches open when so many of us are banking online. I've only once been in a bank in the last six years. I don't miss it at all. So I only use digital banking and without digital banking, I'd be completely lost. I understand the concern. I don't know what you do about it.

13:12I don't know if you can force a bank to remain open. I've got great concern for those who want to have face-to-face banking, but I don't know what the answer to the problem is because it's unrealistic. I think one of the banks in Abbeymore had six regular customers in the last few months when it was open. So I don't even keep a bank open for six people. Kenneth, thank you very much. Charles, he makes a really important point, doesn't he? Keeping a bank open for six people seems impossible. But for those six people, it must be completely essential. And that is the essence of this entire debate.

13:46That's the key question at the heart of Richard Lloyd's review. And that's why his review is so timely, because as we see more and more people managing with digital banking, we're going to see the number of people who actually enter a branch falling further. It's already fallen a huge amount. And that raises the question of do you keep a branch open for just a handful of people? and actually will banks continue to support Cash Access UK's banking hubs if that footfall deteriorates then? So whether these things are going to be put on a statutory footing is one of the key questions. Okay, well, we've been talking about those banking hubs, those ways that banks are trying to ensure people can still access services.

14:30Gareth, your organisation then, Cash Access UK, as you've said, it operates these banking hubs alongside the post office, doesn't it? And these are where different providers offer access to banking services from one site in a community. There's usually a counter service open every day. And then on specific days, each different bank sends a member of staff out to deal with more complex matters. Just outline then what we've seen so far in terms of the rollout. Charles has touched on the number that we've seen, but how much appetite are you seeing? Well, the amount of banking hubs that get built is really a direct reflection of the amount of banks that actually close.

15:06So Link, who are the company that undertake the assessment, will look at each community and then decide whether or not that facility should be there. As we've already said, the banks and the government have already committed to delivering 350. Where we finish, I can't really say. I think when we get to that final number, there will always be a community that's on the wrong side of the decision because it's probably not sustainable to have a banking hub in every single village. Why will there always be a community on the wrong side of the decision? Because banks are not exactly struggling, are they?

15:44In the first three months of this year, the big four retail banks each made two billion quid or more in profit. Shouldn't they be doing more to help those communities? Well, I'm not a spokesperson for the banks, but I'll give you my view. I mean, these are commercial organisations and the profits that you're talking about are directly attributed to the size of those organisations and the investments that they make. So I don't think that's necessarily a fair argument. What I would say is that they do have a responsibility to their customers, including vulnerable customers. And so far, what I have seen is that there's been a good response to that.

16:22What we need to understand is exactly what that response should be. And I think that the review is very, very important. Cheers to fall savings at Whole Foods Market, home of higher ingredient standards. This Halloween, share chocolates and candies made without that spooky high fructose corn syrup. Throwing a party? Make it easy with a Barry Chantilly cake. Ready to cook pizza, no antibiotics ever chicken wings, and sushi made fresh daily. Fall gatherings never tasted better. Save through November 3rd at Whole Foods Market. Innovation has always kept the world moving forward, but it also comes with risk.

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17:31Timely. Okay, let's hear from one listener who's been in touch to say the rollout of these hubs is not happening fast enough. Hi, Manly Box. My name is Warren. I live in Pottersborough in Hertfordshire. All we have is one little building society left. My bank is shut. There are no local hubs to replace the face-to-face service that we were used to. We need these hubs. Please, is there any way that the banks that have gone can be replaced by something that we can actually see a human being? And if we have problems, which we all do, the financial system in this country is getting more and more complicated.

18:12And a face-to-face interview with someone who can help us will be gratefully accepted. Thank you, Moneybox. Thank you, Warren. Gareth, you've heard Warren's plea. When we've lost 6 ,700-odd bank branches, are 240 hubs really going to cut it? Well, I think you have to remember that a banking hub comes into a community after all banks have closed. So if there is one remaining bank, then a banking hub will not be recommended. So you've almost got to divide that number by four or five to get the ratio of banking hubs to branch closures. As I say, the rules are put together by the banks, overseen by the FCA.

18:58and there are then careful decisions that are made about when it's relevant to do so. Also remembering that this is about access to cash legislation. So when LINC are looking at a community, they are looking at whether or not there is a suitable provision of cash withdrawal and deposit services, not whether or not there should be access to advice. OK. Charles, do you think that these hubs can replace banking branches? Because you told us in the past that some of them don't even have printers. Well, I certainly think they could. As Gareth has outlined, the way in which link assesses them at the moment really focuses on the issue of the community's needs for cash, withdrawal and deposit.

19:42It would be possible to rewrite the rules so that it focused on a broader set of needs. So that's number one. We could have more of them. That's number two. and we could also look at the ways of spreading the burden of financing those hubs across perhaps a slightly broader group of banks than we do at the moment. So it's all up for grabs and I'm really pleased that Richard's review is backed up by some provisions in the legislation that's currently before Parliament that says if he recommends that there should be a duty to provide face-to-face banking services then Parliament doesn't need to go back and look at that again.

20:22So I think we'll see real potential for change through this review. Gareth, do you think there needs to be change? Because these are not full banking replacements. And if they're all that a community has left, they're not going far enough. Well, I think the one thing is clear is that some people, digital does not work for them. And we need to think very, very clearly about all different ways that those people are able to manage their money from the telephone for payment systems and including face-to-face advice. So the review is really important to clarify that. As far as banking hubs are concerned, I think they are and have proven to be a very, very viable solution.

21:02As I've said, 95 % of people who use banking hubs get what they need and people seem to like them. So if we are required to build more as a result of that, then we stand ready to do so. What's the criteria then for getting one in a community? You've said all the banks have to go. Does that mean it automatically happens if there are no banks immediately around? Yes. I mean, if people are really interested in the detail around the criteria. Oh, our listeners are very interested. You can find the detail on the link website where they go through all of the steps that they undertake to assess whether a community needs a banking hub.

21:38But essentially, they are looking at the overall size of the community, what facilities are in play at the moment with regards to deposit and cash withdrawal. So looking at things like the post office, does it have the capacity to cope with that diverted flow of people that now do not have access to banks? What's the ATM provision look like? And so on and so forth. Once they've assessed all that and then also thought about the demographics of that community, they then make their decision. So not all communities who might feel they need one can get one. And the hubs themselves cannot do all the services that the community previously had from their bank branches.

22:16I think we'll be fine within banking hubs that we can do almost all services that people are using on a day to day basis. Now, different banks have different propositions. So there may be some particular services that that particular bank would like you to deal with in a different way. But generally speaking, you will get what you need. Charles, what's your view? My view is that there's more progress needed on that. I think you mentioned earlier the fact that generally speaking, you can't get the banking hub to print out a statement or a letter from your bank. I mean, I think that's an easy fix, surely.

22:52and I think it would be very good to have a much more standardised set of services which are offered across all the banks that use a hub so that people don't come away disappointed. Having said that, I absolutely agree with Gareth that people are overwhelmingly satisfied with the service that they get from banking hubs and it's not just the service that they get, it's the confidence that having that hub gives to them, their community, to their high street. Gareth, how many people are actually using these hubs? Do you have numbers on that? Yes, so on an individual basis, we generally see around 150 to up towards 200 transactions a day.

23:29And across our estate, we have a million transactions a month. So they're very, very well used. OK, well, post offices themselves are also offering basic banking services. And I've been out to one. I went to Earlstown Post Office in Newton-le-Willow's Merseyside to meet the postmaster Imran and hear what kind of banking they offer and how much demand there is there. Hi, is it Imran? Hi, Felicity Hanna from Moneybox Live. How are you doing? I'm all right. How are you? You okay? I'm good. I'm good. So tell me about your business, because this is not just a post office, is it? It's not, no. So yeah, so we do the post office, which is generally mails, but we've obviously got a massive amount of banking that we do as well.

24:12And then obviously, as you can see, we've got a lot of stationery, grocery, confectionery and drinks as well. So a bit of everything. So tell me about banking. How big a part of the post office business is that for you now? Massive it is, honestly. I'd probably say around about 60 % of our income now comes from banking. Yeah, so we do all major banks that are from the high street that have obviously closed their branches and customers can come in and deposit, withdraw, even deposit checks as well. So yeah, it's a massive amount of the amount of business that we do comes from banking. Is it mostly local businesses coming in to kind of hand over their cash or is it people as well?

24:49People, absolutely. It's everybody. So, yeah, we do have a big amount of businesses that come in, but daily customers that like to still deal with cash. A lot of people feel comfortable. A lot of people manage their budgets with cash. So they come, take their weekly allowance out and then manage their lifestyle in that way. So, yeah, a lot of everyday customers. We're in Newton-Lewillows. Do you have many bank branches still in town? Not at all, not at one. Not one? Not one, no. I mean, we've just had a new banking hub, which has been opened up recently. But other than that, there's not a single branch.

25:22What can't you do, though? Because obviously there's some things like financial advice or when you actually need a banker to talk to. Yeah, so we can't do anything like that. I always say to the customers, we are literally a glorified cash point. So literally, you know, we can do what you can do at the cash point. But we're a little bit more of an interaction with those. that safety that you're actually speaking to somebody and you're not worried about having some kind of fraud or something like that haven't taken place on your accounts. So you've just been using the post office service? Yes, I have, yeah.

25:52Do you ever use the banking service here? Sometimes, yeah, but mostly it's all online now, yeah. Have you just been doing some banking here? Yeah, I needed some cash and there's very limited access at cash machines. The post office was probably the most convenient. Can I ask what you were doing at the post office there? Were you posting? Were you banking? Banking. Just putting money into my personal bank account. It is quite handy, to be fair, having this here, yeah. What would you do if you didn't have the post office here? Be rather stuck, definitely. For an excuse just to come and see me, Michelle.

26:27And of course, yes, he makes the experience very, very worthwhile. There you are. Thank you to Imran for letting me bother his customers. Loads of you getting in touch on this. you feel very, very strongly. David in Dorset says, I was supporting my brother-in-law in his mid-80s who did not bank online, so we visited a community bank. To our surprise, they could not process a cheque. Instead, we had to go to a post office, complete a form and submit it via their system. Bill says, it's even more annoying when I'm phoning your bank if you're advised to go along to your local branch. And Roslyn has emailed to say, I am one of the many thousands or millions of people abandoned by banks.

27:03This has led to many problems and difficulties from buying a new car to premium bonds and all sorts in between. And Rosalind says, I refuse to do online banking. And if I phone them, I'm more often than not told to pop into my local branch, a round trip of 130 miles. Thank you so much for those messages, for all your messages. We talked a lot about how banking is changing. So I want to ask both of you a final question. What do you think banking will look like in another 10 years time, do you think? Gareth, will it be a total transformation? I think you're going to continue to see a huge amount of change.

27:37The payments side of banking is going to change beyond all recognition. The way that we pay bills in the future will be completely different. I think AI will bring in a new level of personalisation and different ways of accessing services. So a bit like we've seen over the last 10 years, it's going to be radically different. I think the key thing here is that we need to make sure that we don't leave our vulnerable people behind whilst we go through that transformation. Charles, what's your vision of the future? Well, I agree with Gareth. I think there will always be a number of people who need that face-to-face service and support.

28:11Thank you very much. Well, I think a final thing that I should probably say is that the Access to Banking Review we've been talking about, it's taking evidence until the 20th of July. There is an online survey or you can email or you can write to them, whatever you want to do. All the details are available on the gov.uk website. Just go to the site and search access to banking services review, call for evidence. Oh, still so many emails coming in. Let's have one more quick one from Claire who says, I have dyscalculia, a form of number blindness. I'm highly numerate and financially savvy, but to a bank online, I see mediatic.

28:45I have to go into a branch to do anything. Thank you so much for that. Well, that is all we've got time for in today's podcast. Thank you so much to everybody who took part. And thank you especially to our experts, Charles Randall, a member of the Financial Inclusion Commission and former FCA chair, and also Gareth Oakley, CEO of Cash Access UK. As I mentioned, Paul Lewis is back with Moneybox at midday on Saturday. He will be interviewing Richard Lloyd, the man in charge of that independent review on access to banking services. We would love to hear your questions and your comments for him. You can email moneybox at bbc.co.uk or you can send us a message or a voice note on WhatsApp.

29:23The number is 033 06783 183. This is your programme. We really do read and listen to every message. And on that note, just to add, last night Moneybox Live won Broadcast of the Year at the Headline Money Awards. Thank you so much to everyone who shares their stories with us. You make the programme what it is. In this podcast, the producer was Craig Henderson, the studio manager Kelly Young, the production coordinator was Catherine Lund. Our editor is Jess Quayle, I'm Felicity Hanna and this was a BBC News Money and Work production for BBC Sounds. So, Alice Loxton, I'm here for the history. Well, Ben Henderson, I like the formality and that's perfect because we have a lot of history to share.

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