The British Bankers Association (BBA) is set to acknowledge that the closure of local branch banks causes problems for a wide range of customers and real difficulty for the most vulnerable.

The BBA will publish, on 2 February 2000, an independent study report into how people cope when they do not have a local bank branch.

The Campaign for Community Banking Services (CCBS) was formed to fight further reductions in local access to essential banking services and to make constructive proposals for meeting the needs of small businesses and individuals where closures become inevitable.

Campaign Director Derek French said, "The report confirms the problems we have been highlighting.

"However, we feel the report under-estimates and underplays the size and seriousness of the issues. There are important points to make regarding the study's findings and what action the banks will take as a result (see notes below).

"What we want to see is some innovative action by the banks to solve the problems and provide high street banking access to those who need it".

Reading West MP Martin Salter, who is establishing an All Party Parliamentary Group on Community Banking said, "The lack of local banking services impacts most heavily on the most vulnerable: clearly there is a need for Government action and intervention."

Help the Aged is one of the 25 charities to support the Campaign for Community Banking Services along with key trade bodies. Help the Aged Head of Public Affairs Mervyn Kohler said, "The Catch 22 of personal banking is vexing pressure groups and charities alike. As the Government asks everyone to take responsibility for personal financial planning, the local bank manager is becoming an extinct species".

Key failings identified by the Campaign for Community Banking include:
Understatement, Size of Problem, Exclusion, Nature of Problems, Solutions, Way Forward, Conclusion. See below for detailed briefing.

Detailed Briefing

UNDERSTATEMENT

• the 8.6 million people currently distant from a bank branch according to the Study, is probably nearer 10 million if branches in factories, hospitals, and universities/colleges are excluded.
• As bank branches continue to close, Barclays and NatWest have recently announced 200 more closures apiece, the population distant from a branch will increase. CCBS has forecast another 1000 communities becoming 'bankless' in the next 5 years.
• The situation is likely to worsen as a result of current take-over activity in the banking industry, driven by cost reduction motives.

SIZE OF PROBLEM

• The 8 case study areas in the report give a better measure as, unlike the national sample, they are all areas which have had bank branches and consequently have expectations of a local amenity which they have lost.
  
  • Over 50% of people in such areas claimed to have specific problems or experience nuisance due to absence of local bank branches
  • 1 in 5 have difficulty visiting their nearest branch.

EXCLUDED

• The Study does not address the related issues of:
  
  • Social and financial exclusion
  • Community sustainability
  • Environmental damage
  • Financial independence
• To all of which the absence of local bank branches contributes negatively.

NATURE OF PROBLEMS

• The most heavily disadvantaged by the closure of local bank branches are small retailers and some of the most vulnerable: the elderly, disabled people, carers, those on low incomes and people without cars.
• Visiting a branch to conduct banking business, especially paying-in, is popular amongst all age groups : 80% had visited in last 12 months; those in their 30s visited at least once per week. For the most vulnerable a shrinking branch network imposes major obstacles.
• For many types of small businesses, especially retailers, visiting a branch is essential : 70% visited at least once per week. Any reduction in convenience is critical.
• For charities, schools, churches, etc local access to a branch is important.

SOLUTIONS

• The internet and credit unions have a very limited appeal as solutions to the identified problems : on average only 2% of customers in the study used the Internet or telephone banks.
• Other than the post office (see below), the shared branch/community bank (i.e. staffed) is the only option acceptable to businesses, voluntary bodies and individuals according to the research.
• The shared branch/comminty bank is top choice for individuals and the overwhelming preference for businesses.
• ATMs and self-service branches have limitations for sectors of the customer base and banks have reservations regarding provison of them in many 'bankless' areas.
• Although post offices would be used heavily if offered as a banking point, their low first preference rating by respondents to the survey is significant :
  • 13% for businesses and individuals in national survey
  • 6% only in case study areas where banks have closed.
  From the bank's viewpoint there are issues of monopoly to address.

WAY FORWARD

• There are many options but most would benefit from a co-ordinated, rather than competitive approach in 'bankless' areas.
• Individual banks' claimed willingness to participate in "one-offs", but only showed "lukewarm" attitude to a national, low-cost, shared branch/community bank. This is unreaslistic in relation to present size, and growth potential, of the problem, especially in view of the customer preference disclosed in the study for this staffed option.
• The banks' reservations regarding a national 'model' for a shared branch/community bank are insignificant and could be overcome if they had the will and an appropriate co-operative steering group is established.

CONCLUSION

• A shared branch/community bank framework.
• A Social Banking Foundation to finance it and other social banking initiatives
• A simple approach to legislation to safeguard service to vulnerable consumers and communities.

And an early response from the banking industry to these proposals is awaited.

CCBS and its member organizations stand ready to participate in any decision making body which will lead to urgent action for the benefit of present and future 'bankless' communities.

Notes to Editors

1. The Campaign for Community Banking Services is a co-ordinating group for 25 national charities and trade bodies representing sectoral interest adversely affected by the closure of local bank branches : the Study results largely from lobbying by CCBS during 1998.
2. A full briefing on the community bank/shared branch model referred to in the report is available from CCBS on 01582 764760 or its website http://home.btclick.com/ccbs/index.htm
3. A briefing on the CCBS proposal for a Social Banking Foundation to take matters forward is available from CCBS on 01582 764760 or its website http://home.btclick.com/ccbs/index.htm
4. A briefing on the CCBS attitude to use of post offices as banking agents is available from CCBS on 01582 764760 or its website http://home.btclick.com/ccbs/index.htm