The concept of rival banks sharing branches in order to save money is gaining currency in the UK — but it’s one the rest of the world struggles to fathom.
“Sounds like sci-fi to me,” was the reaction of one US banking commentator when I called to ask if she saw the trend extending across the pond.
Six of the UK’s biggest high street banks have just agreed to extend a pilot scheme sharing counter services in a dedicated ‘Bank Hub’ operated by the Post Office. In time, it is hoped the model can be expanded from two locations in England and Scotland to potentially dozens more.
Servicing customers from a single, shared counter seems alien to those in the US because the retail banking market is highly regionalised and fragmented, with regulatory barriers aplenty.
But American banks face the same problem that’s uniting their British counterparts — the rising costs of providing access to cash in an increasingly digitised world. As regulators and policymakers place a social obligation on banks to swallow these costs, sharing space seems the obvious way to split them.
In the UK, the Treasury is consulting on new laws that would force British banks to provide cash deposit and withdrawal services to all personal and small business customers within a given distance.
The exact details have yet to be hammered out, but the Financial Conduct Authority will have enforcement responsibility, which could include blocking future branch closures, and ordering banks to reopen in certain areas.
The UK’s rapid shift towards a cashless society has prompted the Conservative party to pledge to protect access, though it has been criticised for slow progress. Cash use plunged by 35 per cent during the pandemic, partly sparked by fears the Covid-19 virus could be transmitted via notes and coins, but aided by the UK’s high uptake of online banking services.
With the average cost of running a UK bank branch estimated at £590,000 ($800,000) per year, banks are eager to cut costs. Numbers of closures have accelerated under lockdown, and towns without a single bank are becoming increasingly common.
However, plenty of respected studies show that vulnerable groups — the elderly and the poorest in society — are the most cash dependent and stand to lose out.
There are limitations to what can be done in a shared branch — customers cannot apply for a mortgage, for example — but the pilot shows the vast majority of visitors simply want access to basic services.
One big finding is the importance of cash deposit facilities for small businesses. Shared banking counters already exist across the UK Post Office network, but for retailers looking to nip in to get some money out, long queues of people returning online shopping are an obvious deterrent.
This, coupled with rising bank charges for processing cash, mean that signs saying ‘contactless payment only’ are becoming increasingly common on British high streets.
“It’s the lack of cash acceptance that is the biggest killer of cash use,” says Natalie Ceeney, chair of the Access to Cash Action Group which developed the Bank Hub pilots. She points to Sweden, which she estimates is two to three years ahead of the UK in the journey towards a cashless economy.
“When Swedish banks stopped accepting cash deposits from small businesses, shops stopped offering cash as a payment option,” she says. Swedish legislation in 2020 forced banks to resuscitate deposit-taking facilities, and Ceeney believes the UK laws will mirror these.
The consultation closes in late September, with legislation not expected until 2022 at the earliest — but the banks are hoping branch sharing could win political favour. Extending the trial buys extra time to explore whether shared hubs are scalable, and appease any regulatory concerns.
The bigger issue is how banks will divide the costs. Should digital banks like Starling and Monzo — which do not have any branches — be required to contribute to any future levy to pay for this shared infrastructure? This also affects JPMorgan, which plans to launch a UK digital bank next year.
If their customers can withdraw and deposit cash at shared facilities, this seems fair — but would people choose a digital bank if those services were most important to them?
The UK is ahead of the curve as fewer than one-fifth of transactions now involve notes and coins. In the rest of Europe, cash accounts for roughly three-quarters of transactions, falling to around 30 per cent in the US, where cities including New York and San Francisco have passed legislation banning merchants from going entirely cashless. This is more of a pressing social issue for America, where an estimated 6.5 per cent of households are ‘unbanked’.
Branch sharing on the high streets of two small towns in Essex and Lanarkshire may feel like a quantum leap, but as cash use declines, it is a solution that bankers around the world will be closely watching.
Claer Barrett is the FT’s consumer editor: claer.barrett@ft.com; Twitter @Claerb; Instagram @Claerb
"caring" - Google News
August 23, 2021 at 11:00AM
https://ift.tt/3zbdu1o
Could banks find that sharing is caring? - Financial Times
"caring" - Google News
https://ift.tt/2z0ngcp
https://ift.tt/3fgQ2Gv
Bagikan Berita Ini
0 Response to "Could banks find that sharing is caring? - Financial Times"
Post a Comment