Using geo mapping techniques, an analysis of the branch networks of the major banks was undertaken for the Campaign for Community Banking Services (CCBS), funded by the member organizations represented on the Campaign’s Steering Group. The data was segmented by radial distances to the next nearest banking facility, a measure increasingly being used by the banking industry to justify their network decisions.

The analysis reveals 1087 urban and rural sole bank communities remaining in Great Britain each of which could become bankless at the whim of just one bank’s management, with no obligation to consult locally. Over 800 communities in England and Wales, not materially different in character from those remaining, have already lost all local banking presence.

A further 545 communities have only 2 banks remaining and these too are vulnerable when bank branch closure programmes resume after the current pause; research has identified a ‘domino’ effect in bank closures at local market level and none of these dual bank sites enjoy even the temporary non-closure protection of the rural sole bank sites.

A total of over 1500 communities are at risk. Most vulnerable are more than 300 last banks in small towns and villages currently protected by pledges given in 2000 not to close “for the foreseeable future”, but which are less than 5 miles from the next nearest bank branch. These pledges are being eroded by, in some cases, significant reductions in days/hours of opening and the introduction into the Banking Code of a definition of “last bank” as “no other bank branch within a 5 mile radius” which poses a new threat to those not meeting the criterion.

Closure of a branch, or a reduction in opening hours, has the potential not only to reduce banking convenience amongst users but to diminish the sustainability of other services as people who go elsewhere to bank, shop elsewhere too. The extent of these local monopolies, and duopolies, has implications for the exercise of competitive choice of banking provider amongst branch dependent individuals and small businesses, including especially the elderly, immobile and retailers.

The detailed analysis reveals significant differences between England & Wales and Scotland, resulting from a more benevolent closure policy of the Scottish banks historically (which may change following the mergers recently with English banks), as well as the obvious geographical differences. The numbers suggest that future closure programmes will have more suburban content and here it is relevant that loss of convenience and competitive choice should be measured in time involved, rather than pure distance, in travelling to/from alternative banking locations; such measures are used by government agencies in assessing competition in other services. The research recognizes this by using an academically assessed 1 mile radius in urban areas to evidence convenience loss but more research on travel time is needed.

The situation with regard to individual banks is broadly comparable but communities with only an HSBC branch are more exposed as its market share of small businesses especially is significantly lower than its competitors and, after a pause of several years, it has recommenced branch closures but without announcing a programme. Rural Wales is particularly dependent on HSBC which has 60% of the sole bank sites.

The analysis clearly shows that the issue of branch closures in ‘marginal’ communities is essentially one for the Big 4, and the Big 3 in Scotland, and yet they are inexplicably reluctant to engage in serious consideration and trials of the shared banking options, including the concept of a “brand neutral”, outsourced vehicle to provide counter services in such locations, advocated by independent consultants and academics as well as CCBS. The widely discredited ‘shared banking’ pilot undertaken by the Big 4 in 2002, even if successful, would have benefited less than 50 sole bank communities i.e. those beyond the 5 mile radius criterion.

The overall numbers are useful in confirming the scale of the remaining problem. However, each case should be seen as individual and its future related to the economic activity, population distribution and the relative gravitational pull of the village, town, suburb or inner city community concerned: regrettably the banks cannot be relied upon to take all these factors, let alone social need, into account. The identification of the vulnerable locations provides a valuable resource for CCBS and others concerned about the continued provision of suitable local access to banking providers, but also illustrates the danger in a radial mileage based approach being allowed to dominate branch closure policy; also the sensitivity of the band chosen.

The situation is not static, the present network sizes are not sacrosanct and more closures can be expected as the economic drivers responsible have not diminished. Additionally, new communities will be created under the government’s new housing plans, particularly in the South East, which are unlikely to enjoy local banking provision unless progress is made with regard to ‘shared banking’ in one or more of its formats in order to reduce/share costs and maximise footfall to viable levels.

The results of this research provide strong support for the need for a constructive and ongoing debate involving the banking industry, consumer bodies and government before it is too late. This is not currently happening.