UK high street banks are moving towards support for shared branches as part of a programme to tackle social exclusion.
The ‘multi-banks’ idea – under which banks club together to pay for a single umbrella branch on an estate or street – is expected to be presented as a favoured option by the British Bankers’ Association (BBA) in a study to be published by the end of the year.
The report on community banking, commissioned by the BBA in February, will assess more than a dozen alternatives to traditional branch banking, but is likely to narrow them down to three main options – providing more cash machines, using post offices or supermarkets as branches on an agency basis, or creating multi-banks. Of these, it is expected to favour the latter.
The BBA report, commissioned after extensive talks with the Campaign for Community Banking Services, has drawn on the views of more than 300 BBA members in 60 different countries, including all the major UK high street banks. Focus groups and market research have also been used.
The report’s brief was to look in particular at the needs of less mobile customers, small firms and community organizations.
Derek French, head of the Campaign for Community Banking Services and a member of the BBA report’s steering group, said multi-banks would be a logical way forward. ‘If banks find they can’t stay in certain areas then it would make sense to set up community branches run by something like ‘Community Banks plc’ that would act as an agent for all the banks’, he said.
French argued that the use of post offices – already promoted by the Co-operative Bank and Lloyds TSB – could cause difficulties. ‘In rural areas where post offices are struggling to survive, then acting as a branch could help to keep them alive,’ he said. ‘But in other areas where post offices are congested, acting as an agent for half a dozen or more banks would cause problems.’
A recent report from the New Policy Institute, an independent think tank, came out strongly in favour of using post offices as ‘front offices’. The study, Meaningful Choices, suggested welfare benefits could be paid electronically into bank accounts and cashed at post offices.
But the institute warned that the government must set out a clear timetable for banks to begin tackling social exclusion and offer ‘a credible threat’ if they do not make adequate progress. This could include a threat to introduce a statutory right to a bank account, as exists in Sweden.
Last month UK industry minister Patricia Hewitt said the government would consider legislation forcing banks to disclose services offered to the low-paid and the unemployed, but first wanted to ‘shame those banks not doing much in this area’.
Andrew Robinson, head of community enterprise at NatWest, said most banks were considering all options seriously and would be ‘very interested’ in the idea of direct payments of benefit into bank accounts. But he warned: ‘the community activists need to suspend their disbelief a little bit and see what the banks come up with. I am optimistic there will be innovation in this area and I’d like to think we are going to see things happening in the near future.’