The Lowdown Hub

Scottish banking pilot offers hope to UK high streets without branchesLenders join forces with Post

Cambuslang was one of two locations in the UK chosen to host a BankHub © Jeremy Sutton-Hibbert/FT

When Cambuslang in Scotland lost the last of its bank branches four years ago, it hit the town centre hard.

“Three [banks] leaving at one time decimated the high street,” said Angeline Coyle, owner of The Tea Bay café in the town of 28,000 people, south-east of Glasgow. All of them closed within the space of 18 months, a trend mirrored across the UK over the past decade.

The closures severely affected footfall in Cambuslang. “A lot of people used to come and collect their pensions there, but when there was no reason to come down they didn’t visit,” Coyle lamented.

It also made it much harder for her to do business. “I had to travel to the bank in the next town to deposit cash, which meant taking two hours out of my day or asking my mum to carry loads of money,” she explained. “We’re only building back now.”

Coyle attributed her optimism in large part to the success of a banking pilot scheme in the town — a rare collaborative effort between the state-owned Post Office and Britain’s largest retail banks. Cambuslang was one of two locations in the UK chosen to host a shared branch, branded “BankHub”.

The two pilots proved the most popular among a number of initiatives launched at the start of 2021 aimed at preserving access to cash, according to a report by Natalie Ceeney, who oversaw all the projects as chair of the Community Access to Cash Pilots initiative.

The increasing use of digital banking and a sharp fall in cash payments during the coronavirus pandemic has exacerbated a trend of branch closures and ATMs over the past decade. It is an issue that affects the elderly, vulnerable people and small business owners in particular.

Since 2012, the number of bank branches in the UK has fallen from 11,355 to just 6,965 in October 2021, according to data from the Office for National Statistics. A recent analysis by Which? identified almost 1,000 branches would close in 2021 and 2022.

In July Rishi Sunak, the UK chancellor, launched a consultation into the issue, pledging to allay concerns that millions of older and vulnerable people could be left without access to cash. He said banks would be compelled to ensure cash facilities were available and promised to set undefined “geographical access requirements”.

The consultation closed in September and in a statement the government said the responses would “help to inform the final legislation”.

The success of Cambuslang’s bank hub pilot, and its English counterpart in Rochford, a small market town in Essex, prompted the Access to Cash Action Group (Acag), a body that brings together the UK’s big retail banks and other interest groups including Age UK, last month to expand the scheme. It plans to open bank hubs in five more locations next year.

“We know that demand for cash is declining, but we also know that it continues to play a vital part in the lives of at least 5m people in the UK — including some of the most vulnerable in society,” said Ceeney, who chairs Acag.

Staff at a OneBanks kiosk in a local Co-op in Denny © Jeremy Sutton-Hibbert/FT

John Bachtler, chair of the Cambuslang Community Council, said: “We have a lot of people with cash management issues who are advised by the Citizens Advice Bureau to use cash to keep on top of their spending.”

Housed in a former butcher’s, the BankHub features a counter with a postmaster who can provide cash and take deposits. It also has a separate office for a rotating cast of community bankers from different lenders to provide more tailored support.

Cambuslang Community Council’s John Bachtler, left, and Mark Lauterburg © Jeremy Sutton-Hibbert/FT

Before the hub arrived, there was a Post Office counter in a convenience store but because of its location, locals such as Coyle did not like using it for banking where everyone could see and hear.

“We needed a unit,” said Bachtler. “People didn’t want to talk finance or business where other people are buying beans and alcohol.”

The bank hub had 76 transactions a day on average during its pilot period, said Mark Lauterburg, a member of the council. “The personal capacity is essential,” he said. “Lots of people can’t access the technology.”

In total, more than £3.1m went through the hub during the trial period.

For Coyle, the hub has been vital. “It’s been amazing, I go every couple of days, I don’t have to hold cash in the shop or at home,” she said.

Half an hour’s drive from Cambuslang to the north-east of Glasgow, the small town of Denny lost its last bank branch in 2018, leaving locals reliant on the Post Office and ATMs, several of which have been vandalised in recent weeks.

Louise Hay, part of Denny Community Support Group, said there were bank branches in nearby towns but they felt “far away” because of the poor public transport links.

“I work with a large disadvantaged group, so inclusion was important for everyone,” she said.

Louise Hay says there are bank branches in nearby towns but they feel ‘far away’ because of the poor public transport links © Jeremy Sutton-Hibbert/FT

More than a fifth of Denny’s 8,000 residents are over 60, while some parts of town rank among the most deprived places in Scotland.

In the local Co-op, Glasgow-based fintech OneBanks has installed a staffed kiosk, which customers of any bank can use for free.

It offers digital banking services as well as cash withdrawals and deposits along with a change machine.

“They’ve been absolutely brilliant,” said Michael Thompson, who runs the Fruit Basket, a local green grocers, and does not accept card payments.

“Without that cash, it’s a sale I wouldn’t be getting.”

Michael Thompson, who runs the Fruit Basket © Jeremy Sutton-Hibbert/FT

The CACP report said users were “very positive” about the experience of OneBanks’ kiosk but found those with fewer digital skills or lacking confidence could struggle.

In the local branch of the Post Office, which is being refurbished, Mark Love, the postmaster, said he hoped the town would ultimately get a bank hub like Cambuslang.

“There’s a huge demand for cash, people picking to use cash or being paid in cash. I don’t think that’ll ever go away,” he said.