Local bank branch closing? Why 350 shared banking hubs could be the perfect solution

The direction of travel was pretty clear back then and in the following decade a further 6,000-odd bank branches have been lost from Britain’s towns, cities and local communities. Barely a week goes by, it would seem, without news of a further tranche of closures. The latest such blow came earlier this week with Lloyds Banking Group announcing that it would be shutting 136 more high street branches as it accelerates plans to cut costs and digitise operations. The group is to close 61 Lloyds, 61 Halifax and 14 Bank of Scotland branches between May this year and March 2026. One suspects it won’t be the final such move by Lloyds, or its rivals.

The justification for this cull, which feels a bit like death by a thousand cuts (or death by 6,000 branch closures, perhaps), is the shifting away from banking in person to using mobile and online services. And there’s no getting away from that trend, which only seems to be accelerating given the proliferation of banking apps, fintech and now artificial intelligence.

Lloyds points out that transactions across the latest branches set for the chop have fallen by an average of almost 50 per cent over the past five years as customers embrace digital banking.

The banks will also point to the costs of running a branch and the associated overheads, particularly as many of them still occupy prime real estate in town centres or city suburbs. Yesterday’s banking branch is tomorrow’s coffee shop, or charity store, it would appear.

All this downsizing has left a growing number of towns - small and not so small - and local communities without a single bank. Where cities and major conurbations have retained a banking presence it’s often a shadow of what existed before, resulting in a bit more travelling and no doubt a bit more queuing.

And that’s the rub. Even with access to all of that financial transacting and power at our fingertips there is sometimes the need to engage the services and advice of a human. And given how woeful many call centre operations are, that means hunting down one of the few branches that still exists, checking on its opening hours (very often very limited) and setting out on a wee adventure.

Since embracing the world of banking by smartphone, later than most, my need to go face to face with my local branch staff has diminished. Many will struggle to recall the last time they had to visit a physical bank. Yet there is a sizeable minority of people who have no desire to go down the digital route. Some older or disenfranchised individuals may not possess a computer or smart device.

And what happens when it all goes a bit Pete Tong? Stable internet connectivity is not a given, devices crash, error codes are frequently unresolvable and security scares and hacks, often with dire consequences for the end user, seem to be commonplace. There is some irony, then, that one of the first courses of action taken by customers affected by IT glitches is to head for their nearest high street branch. If it still exists.

Some argue that the big banks, which typically generate billions of pounds in annual profits, have something of a public service obligation to maintain a critical network of branches for those customers - many of them longstanding and loyal - that cannot or will not go down the digital route. Or to provide that physical back-up for times of IT outage or for confidential, in-person advice. Yet banks are not charities, and they have to adapt their business models to an ever-changing, forever-connected world. One can see the argument for closing some tired old outpost that’s getting a handful of customers a week, though some branches that have had the chop in recent times have looked pretty busy to me before the axe descended.

Which brings things round to one possible solution for maintaining that physical connection - the shared banking hub. This week’s blow from Lloyds coincided with access network Link confirming its 200th banking hub recommendation. These shared banking spaces are similar to a traditional bank branch but available to everyone.

When opened, the hub consists of a counter service operated by Post Office employees, where customers of any bank can withdraw and deposit cash, make bill payments and carry out regular banking transactions. In addition, there will be private spaces where customers can speak to community bankers from their own bank. The hub would see banks work on a rotating basis, with staff from different banks available on different days.

Since 2022, Link has assessed the closure of 1,784 bank branch closures. Its latest wave of recommendations includes hubs for four Scottish sites, in Alexandria, Annan, Bishopbriggs and Helensburgh.

The UK government has set a target to roll out 350 hubs by 2029, which is a relative drop in the ocean compared with the scale of the branch closures, but it’s commendable that under new Financial Conduct Authority rules, banks and building societies must assess whether changes to local services, like shutting branches or removing cash machines, leave local communities lacking ways to take out or pay in cash.

It may be far from perfect, but it’s just possible that the shared banking hub can offer a solution that works for customers and institutions alike.