Access to Cash: The Connection between Bank Branch Closures and the Post Office

In June I published an article that gave a brief overview of the Post Office network in the UK and how over the past four decades it has been in decline.

To begin with I referred to an Access to Cash‘ review that was commissioned in 2018 to ‘consider consumer requirements for cash over the next five to fifteen years‘. One of the recommendations by the Access to Cash panel was an increased role for the Post Office to assist in shoring up Britain’s cash infrastructure. The viability of this recommendation is what we will now develop on.

As with high street banks, there are two ways to access your money through the Post Office, either over the counter or by using an ATM. Customers have the freedom to bypass their bank and instead opt to pay in and withdraw money from their local branch. There are limitations to doing this, however, as currently you cannot transfer money between accounts or indeed open and close accounts.

Whilst the use of a Post Office for basic cash purposes is not revolutionary, the availability services offered by the network has not been clearly communicated to the public. This was an area of concern picked up on by the consumer group Which?, who discovered that half of 2,000 people surveyed did not know that the Post Office offered banking services. This seeming lack of awareness obviously makes the job of raising the profile of the Post Office as a defacto bank that much harder.

As for ATM’s, the UK has roughly 65,000 in operation (over 50,000 of which are free to use). 16,000 free ATM’s are located at bank branches, with 2,600 found at Post Offices.

With the Post Office network comprising over 11,500 branches, the availability of ATM’s through the network is clearly not sufficient enough to offer all its customers unrestricted access to money.

Whilst Post Office ATM’s are free to use, other such machines are being withdrawn. According to LINK, the UK’s biggest cash machine network, 1,400 free ATM’s were closed between January and August 2018. LINK have also said that on average more than 250 free ATM’s are closing every month. From the end of January to the start of July 2018, free ATM’s fell from 54,500 to 53,200.

Two of the main operators of cash machines in Britain are Cardtronics and Note Machine. Both blame a lack of profitability in running free ATM’s for the decision to charge customers at specific locations. They also pinpoint the rapid increase in people opting to bank online. Where I live a previously free cash machine outside a convenience store has just been converted, and now charges £1.75 for each cash withdrawal.

A few weeks ago Which? reported that in the first three months of 2019, almost 1,700 ATM’s had begun charging customers for withdrawals.

The reduction in free use ATM’s comes as bank branches are closing throughout the UK at a record rate. This was illustrated by an article from November 2018 by the Financial Times. In 1988, there were 20,583 branches operating. Today, this has declined over 60% to 7,586. Unsurprisingly, this has been put down to customers migrating to contactless technology and online services.

Of the 7,586 that remain, one in five people are over 3 km away from their nearest branch. One in ten are over 5 km away.

The BBC ran a story in October 2018 that revealed an equally troublesome trend. According to the Office for National Statistics, nearly 13 million adults now live in locations where half of local banks and building societies have shut down. Nearly 6,000 branches alone have closed since 2010, representing a 30% decline of the network. On average, every region in the UK has seen 20% or more of their banks disappear. This comes as over 60% of people now use contactless technology and online banking as their primary options.

Break the figures down further and it becomes apparent that 63 constituencies out of 650 now have fewer than five ATM’s operational per 10,000 people. The worst example is Sheffield Hallam, with just two free ATM’s per 10,000 residents. By comparison, major cities like Manchester and Birmingham offer over fifteen ATM’s for every 10,000 people.

In light of this, Research conducted by Which? in April 2019 warned that bank branches will continue to close now and into the future. According to the consumer group, across 2018 and 2019 banks and building societies have or plan to close 1,080 branches. This figure encompasses all of the UK’s major high street banks, including Barclays, Natwest, Royal Bank of Scotland and Santander.

Which? began monitoring bank closures in 2015, and since then have found that 3,318 branches have closed, equating to 70 a month. 911 of these were in 2017 alone.

Aside from the North East of England, every other region has seen on average over 200 branches close since 2015.

Questioning why closures are on the rise, a report published by UK Finance (the trade body that represent banks) found that in 2017 38 million adults used online banking. 22 million used mobile banking apps. Their research also found that back in 2012 branches were receiving around 140 visits a day. In 2017 this had dropped to 104, a 26% decline.

When discussing the decline of the Post Office network in my first post, I wrote about how it was rural areas that would be severely impacted as the number of branches decreased. I mentioned how it was the disabled, the elderly, and those who have poor broadband and mobile coverage, or no access to the internet at all, who would ultimately be excluded from financial services should they lose their local Post Office.

The reason for this is because it is those same rural areas that are also seeing their bank branches close down. This was affirmed in a briefing paper called, ‘Bank branch closures‘, published by the House of Commons Library in October 2018. As well as acknowledging the impact on rural communities, the paper made some other key observations.

The current programme of bank branch closures can be traced back to the financial crisis in 2008. As author Timothy Edmonds explained, the effect of new regulatory standards on profits following the crisis encouraged banks ‘to look again at the viability of their bank branches.’ In other words, the onset of crisis gave them an opening to ratchet up the consolidation of branches.

Another relevant aspect was the global spike in bank mergers in the wake of Lehman Brothers collapse, which in the UK saw Lloyds Banking Group acquire both HBOS and Halifax. This, detailed Edmonds, resulted in a duplication of branches on the high street, and further reason for the banking industry to argue that more consolidation was required to raise the profitability of banks.

All told, bank mergers after 2008 were not limited to HBOS and Halifax. Between 2008 and 2011, the Yorkshire Building Society merged with Barnsley, Chelsea, and Norwich and Peterborough building societies. As with the acquisitions by Lloyds, the duplication of branches led to some of them closing down.

The trend of branch closures began long before 2008, however. In 2000 when the Royal Bank of Scotland merged with Natwest, RBS decided to close hundreds of branches because account holders could now bank at a Natwest branch.

Where the Post Office factors into this is that previous governments have touted a solution to bank branch closures as being ‘the development of new partnerships between local institutions, such as the Post Office, and the banks.’

In the current climate this is a non-solution. And the reason for that, as Edmonds demonstrated, is that a partnership of this sort would ‘depend on the survival of a broader post office network, which suffers from similar constraints as banks, often in the same geographical areas.’

As I detailed in my article on the Post Office, the network is under more strain now than it has been at any other time in its 360 years of existence. The rise of Fintech (Financial Technology) has directly coincided with the reduction in public demand for Post Office services.

Within the briefing paper it is reported that between 2014 and 2015, cheque and paper credit usage declined by about 13%. A decline that ‘is expected to continue in step with new technology and changing demographics.’

A renowned Fintech analyst, Chris Skinner, was quoted by Edmonds about how Fintech is replacing ‘buildings and humans with software and servers‘. It is what Skinner described as a ‘digital platform with customer centricity, rather than a physical structure with product focus.’

The Post Office network very much falls into the latter. The demand for the physical has been in decline over the past decade, in favour of what central bankers term ‘intangible assets‘. As the stats attest, people are gravitating away from traditional banking services to digital only constructs. This is not exclusive to the Post Office. The fact that a growing number of ATM’s are now charging customers means that in some areas it has now become a genuine challenge to access your money without incurring a cost.

Is this by accident or by design? Whilst banks blame falling profitability, my view is that there is a purposeful agenda behind moving people away from tangible money. This is something I have talked about in previous articles. A dominant part of contemporary central bank discourse revolves around ‘money in the digital age‘, and for how much longer cash will be a viable option as global institutions seek to implement digital only currency. The full digitisation of assets is ultimately the direction that globalists are seeking. A world where every individual is subservient to the banking system, and unlike today has no alternative to trading outside of it.

When the Access to Cash panel cite the Post Office as an institution that could be part of the solution in preserving cash as an entity, it fails to appreciate the plight of the network as a whole. The warnings issued by sub-postmasters of an imminent and substantial rise in branch closures are not groundless. The fact that the bulk of these closures would come in rural areas lends credence to the prospect that the growing deprivation of vital services in these communities is a deliberate attempt to move people further towards densely populated towns and cities, and bring them more closely under the control of what is known as the ‘Smart Grid.’

Two tenets of the smart grid include the sustainability and efficiency of energy resources, which together form a significant part of the United Nations Agenda 2030 programme, and what is referred to by bankers and politicians as ‘The Fourth Industrial Revolution.’ To learn more about this I would encourage readers to have a look at a series of articles I published on this subject in 2018.

As I raised in my first post when discussing the Post Office, the business of government has been entirely consumed by Brexit. Because of this the future viability of public services has not been part of any meaningful debate. The network subsidy which the Post Office depends upon ends in 2021, with no immediate plans to replace it. Rural branches that are not in themselves profitable but stand as the last line of service for some residents would be forced to close. Altogether, there are 6,110 rural Post Office branches (53% of the network) in the UK.

We have seen how national and global administrations use crisis scenarios as an opportunity to consolidate. A major economic crisis between now and 2021 could have severe implications for the network.

To believe that the Post Office Network can respond effectively in preserving long term cash availability to the public is a fantasy given current circumstances. As bank branches continue to close, and free to use ATM’s are converted to charge customers per withdrawal, never has the future of cash looked more vulnerable.

The truth is that the Post Office is in no condition to help ensure cash remains viable whilst its own future is in doubt.

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