Banks statement

© Simon Poulter 2021

As a statement of the somewhat bleedin’ obvious, digitisation has changed everything. Want that new album? Amazon will have it on your doorstep by 1pm tomorrow (though there’s no guarantee it won’t have been nicked by 1.30…). Can’t be arsed to go out to the supermarket? Don’t worry, your groceries will come to you! And as for banking, well, you can do all that with your thumb and your iPhone while perched on the sofa. 

Digital technology, the Internet and, specifically, the smartphone, have transformed modern life beyond all recognition, but along with it - and these last couple of years have brought this into sharp focus - have increasingly made our high streets look threadbare, with retail chains disappearing online (or disappearing altogether) to be replaced by the ubiquitous coffee outlets, charity shops and fast food outlets. In many towns, the banks that were once local community fixtures - and in a large number of cases are even listed buildings due to their heritage - have been repurposed into pubs, restaurants and even homes.

Digital commerce has also led to a reduction in cash being used. Before COVID-19, its use in the UK was in decline, according to the Bank of England, which found that only 23% of all payments in 2019 were made using cash, down from close to 60% a decade earlier, as debit cards and digital payments became more commonplace for everyday purchases. Withdrawals from bank machines have dropped to less than £100 million a day, which sounds a lot, but not for a country of 67 million people. The pandemic has seen cash usage fall even further, as people work from home, shop online and continue to hold concerns about handling paper money. On average, people now go to a cash machine less than twice a month, down from three times a month before the pandemic hit, according to the ATM operator Link. All of this reflects the banks’ progressive retreat from our high streets. Five branches have been closing for good every two working days since 2015, and last week it was announced that TSB plans to close another 70 of its locations, leaving just 220 remaining next year, down from 536 only a couple of years ago. 

For many - but not all - online banking has changed the traditional consumer banking experience, and the move to cashless, contactless payments - especially during the pandemic - has made the idea of entering a bank branch to grapple with an inadequate ballpoint pen on a chain and quaint old paying-in slips seem archaic. But that doesn’t mean that cash hasn’t disappeared altogether, and nor does it mean that people have stopped writing cheques. There are still legitimate trades that only take cash (or, at least, prefer it), and just this month I received a cheque from the DVLA for a car tax refund. So where do you go to pay all that in?

© Simon Poulter 2021

Like everywhere else, our local high street has been gradually losing its banks over the last few years. Once it was resident to all the main clearing banks and building societies, but the Barclays and Santander (which, as Abbey National, was where I held my first ever savings account) have gone and in February the Lloyds will join them. For cash, along the half-mile stretch of our high street there are machines outside NatWest, HSBC (when it works - that one has been out of order for three weeks) and Nationwide, plus one inside a Tesco Express and another outside a convenience store at the opposite end.

According to recent research by the Mail On Sunday, the biggest clearing banks have closed down 2,766 branches over the last five years - a decline of 36% - and those that remain are increasingly staff-free, relying on indoor self-service machines for most transactions with a single employee to help out with any questions. Gone are the days of having a conversation - difficult or civil - with your friendly local bank manager. According to the Mail, Barclays and HSBC have been closing staffed counters for their combined 32 million customers in the UK, leading critics to say this is all part of a cost-cutting exercise intended to drive up online operations. All very well, but even in 2021, not everyone is online. Like my 92-year-old mum, who still writes cheques. It’s not just people like her: there are those who aren’t familiar with technology, or have physical impairments, such as blindness, which makes the use of technology near impossible, and welcome the ability to speak to someone face-to-face.

That’s not to say that digital banking isn’t a good thing, for those who can access it. I’d be happy if I never received another paper statement again (and it’s still bizarre that one bank I use still issues paper communications as a default, unless you switch it off). But clearly there are, still, situations which require the ability to speak to an actual human being. Given the time it often takes to wade through multiple levels of menus when you try and call a bank, you can’t fault people for wanting to do their banking old-school, and walk into a bank branch to speak to someone behind inch-deep armoured glass. Research for Consumer Intelligence recently found that, in a poll of 1,027 adults, nearly half preferred a face-to-face service, countering the argument that banks put up that people prefer to do their banking digitally. As with all aspects of the retail economy, COVID-19 has impacted banking, but according to the Financial Conduct Authority, many banks’ opening hours haven’t been restored to pre-pandemic schedules. One in three still shut at 3pm, which has also been cited as part of the effort by banks to push customers online.

I suppose, though, I should consider myself lucky to live near a high street that at least still has some bank branches: increasingly, rural communities aren’t so fortunate. Even worse if you live in the Falkland Islands, where the only cash machine in its capital, Port Stanley, is due to be closed down  in the coming weeks.

Picture: ING

While banking has become increasingly dehumanised in the UK, digital banking hasn’t totally taken over elsewhere. I recently went to Amsterdam to sort out some personal banking issues which had to be resolved in-person (don’t worry - I don’t operate a drug or diamond business on the sly. This is a legacy of having lived in the Netherlands for almost ten years). The Dutch have been one of the most digitally-advanced nationalities on the planet, and seemingly introduced online banking long before anyone elsewhere. But not being Dutch, and no longer living in the country means that when communications break down, and a measure as simple as changing my postal address needed to be finally taken care of (having been prevented by more than a year of pandemic-induced travel restrictions), the only option was to sort it out in person. To their credit, my two banks - ABN AMRO and ING - treated me well, not the least of which being that my appointments were conducted in fluent English (gratefully appreciated, given my atrocious Dutch language skills), with friendly but business-like staff taking care of me. And the bank branches in Amsterdam that I visited were smart, modern, comfortable and attractively designed. Welcoming, even.

Even if we accept that banking is adapting - or reacting - to the digital revolution, not every bank is retreating to the virtual world completely. In Italy, the Ligurian regional bank Banca Carige is introducing what it calls “NextGenBranches” that are open 24 hours a day, seven days a week, but run entirely by computers. Each branch features plush-looking workstations at which customers can plonk themselves down and conduct all their banking, from opening new accounts to applying for credit cards and loans, and even getting mortgage advice via a video links to a human adviser. Scanners, printers, card readers and other tech enables other types of bank interaction. From a customer point of view, this is all about convenience and modernity, but you can’t help feeling that it’s another nail in the coffin of the banking sector being a career choice,

Auriga, the company behind the Banca Carige concept, is even talking about rolling out these desks in other locations, such as supermarkets. In the UK, too, banks are also looking at setting up banking facilities in other retail settings. Fintech business OneBanks has developed a pop-up ‘kiosk’ that can be installed almost anywhere instantly, requiring a single staff member to supervise its use, but it also uses a combination of a smartphone and a traditional bank card to work. Three OneBanks kiosks have been installed so far in Co-op branches in Scotland, in towns without any traditional banking outlets, and the company plan to install another 150 within the next three years. And, despite dwindling numbers of high street post offices, some of the major banks are believed to be evaluating installing mini branches inside postal centres, probably in lieu of them closing main branches in town centres.

Perhaps we can be reassured that local banks aren’t going to completely disappear for good as digitisation continues, but there’s no ignoring the fact that banking is dwindling. On top of the elderly and digitally disenfranchised, there are still the very real needs of small businesses to be taken into account, enabling them to pay in cash takings safely, which often can’t be facilitated by hole-in-the-wall machines which have cash limits and security risks, although banks are considering the introduction of new machines that can handle larger sums. That said, machines can go wrong and, despite the banks’ best intentions, can and do get hacked. Perhaps George Banks, the constipated financier father in Mary Poppins, was onto something when he encouraged his son Michael to bring his tuppence into the Dawes, Tomes, Mousely, Grubbs Fidelity Fiduciary Bank, where it “will compound”.