The acceleration of bank branch closures in the UK is failing to be countered by effective banking alternatives for small business owners, a new study by the Federation of Small Businesses (FSB) has found.
According to the report, the total size of the bank branch network has halved to just over 8,000 branches in the last 25 years – with a further 50 per cent cut predicted in the next ten years.
The organisation claimed that the branch closure programmes of the UK’s high street banks posed a serious threat to the ability of small firm owners to access efficient and reliable banking, subsequently hitting productivity levels.
The research suggested that shortcomings in infrastructure and training have failed to provide widespread digital banking access for small business owners.
National chairman of the FSB, Mike Cherry, urged banks to work with the government to assess the impact of closures through “effective monitoring”, and create greater transparency on small business access to banking services.
“The rapid pace of bank branch closures across the UK presents some very real and tough challenges for small businesses,” Cherry said in a statement.
“FSB members highly value the face-to-face interaction they receive in-branch, particularly when making complex financial transactions, with staff who often have a greater understanding of their business and the local economy.
The study suggested the value in face-to-face interaction that a bank’s in-branch service is able to provide, alongside expert advice in complex financial transactions, as well as the expertise in the local economy.
“In addition, many of our members deal heavily in cash and cheques and need access to over-the-counter banking facilities on a regular basis,” Cherry added.
The study also pointed to the “disproportionate impact branch closures are having in some parts of the UK”, citing an unacceptable level of rural broadband connectivity as a major regional issue.
Cherry suggested that banks have a responsibility to meet small business owners half-way, by providing in-branch opportunities and resources to help develop digital awareness and “better meet customer needs”.
“Barriers towards digital inclusion, such as unreliable broadband connectivity, and a lack of confidence in using digital services creates serious challenges. These are some of the reasons which explain why the protection of in-branch banking is so important for financial inclusion,” he said.
Unreliable broadband connectivity was further highlighted in a recent report from the Institute for Public Policy Research (IPPR) think tank that stated a “digital revolution” was required in order for small firms to drive the Northern Powerhouse initiative.
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