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Dearth in access to UK financial services intensifies

The digital current account provider Pockit has offered some telling new insight into the access to financial services debate by comparing the rate of bank branch closures with deprivation rates in England.

Using Office for National Statistics data, Pockit revealed 990 branches in England’s most deprived areas have closed since 2010. The findings were reported in the media as the emergence of “bank branch black spots” throughout England’s most deprived areas.

It would be reasonable to suggest this trend is likely to be reflected throughout the wider UK. Combined with dwindling numbers of free-to-use ATMs, these cutbacks to financial services infrastructure are bad news for society - another barrier to financial inclusion, which itself links to deeper problems.

As well as deprived communities, people in rural communities are also negatively impacted by these closures. The Financial Conduct Authority says, for example, people in rural areas now have to travel – on average – more than five miles to their nearest bank branch. That’s 50 miles extra per week if you are a small business owner that wants to make daily cash deposits. Equally, if you are a consumer who relies on public transport, travel is not easy. Parts of rural Scotland and Wales are particularly vulnerable.

As Thomas Docherty of consumer charity Which said in an address to the Welsh Assembly in June, communities face a “double whammy” – a lack of branches and a lack of alternative banking options. Post Offices offer some relief but shouldn’t be seen as a get-out clause for policymakers or banks in addressing the issue. Fair access to financial services is both diminished and diminishing – fact.

This chronic lack of investment and innovation in better financial services technology is failing society.

Part of the reason for this is the way some established forces from the supplier side, especially in the ATM industry, have behaved. In a nutshell, these businesses have locked FIs into an expensive game of upgrade after upgrade, offering no real innovation along the way. FI’s procurement teams have become averse to any alternative investment in technology out of a fear this cyclical cost pattern will repeat itself.

Legacy technology is incredibly expensive to upgrade. It lacks the versatility and agility of modern cloud-native banking architecture – which also doesn’t put FIs at the mercy of a single vendor. Cloud is open, cloud is always improving, cloud is unambiguously 21st-century technology for 21st-century demands.

By being bold, by taking that first step and investing in cloud architecture, FI’s can reinvent services like the old-hat ATM so they can offer a full range of smart banking services and plug the emerging shortfall in access to financial services for portions of society that are at risk of being marginalised.

From a competitive perspective, it would also be one way of ensuring these customers are retained, while potentially onboarding new customers from other FIs who aren’t prepared to think laterally about how to solve the FS access riddle.

Progress is possible. Cloud-native technology can move ATMs forward from delivering a small number of basic functions i.e. cash withdrawals and balance checks, to offering advice, loans, mortgages, cash deposits and more. In other words, those same financial services that are currently being stripped out the high-street as bank branches are shutdown.

However, a concerted effort will be required for this to happen – starting with an acknowledgement from both industry and policymakers that this is a problem which isn’t going to resolve itself without a consensus among the stakeholders involved. Real, actionable decisions need to be taken and soon.

 

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Jamie Barclay

Jamie Barclay

Marketing and Communications Manager

Renovite Technologies Inc.

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26 Jul

Location

Dunfermline

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This post is from a series of posts in the group:

Financial Inclusion

The financial services industry has much to contribute to the UN and World Bank goal of full financial inclusion by 2020. This group will focus on industry contributions, ideas, barriers and enablers.


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