Campaign for Community Banking Services closes down
THE Campaign for Community Banking Services (CCBS) are closing down, leaving little hope that the struggle to prevent bank branches from disappearing from high streets and rural areas will be successful.
The group's founder, Derek French, explained the decision by saying that he didn't want to mislead people and communities into thinking that the tide of branch closures could be stemmed.
With remarkable bluntness for a public figure, the former Natwest banker said, "[Branches] are being hit by closures and we don't want people to think they can stop it ... There's no hope of changing anything."
This announcement comes at a time when 546 branches have already shut down in the first half of this year alone, putting 2016 well on its way towards overtaking 2015's total of 681.
Aside from being a blow to the communities looking to the CCBS in hope of rejuvenation, the news of the campaign's demise will also damage recent efforts to make banking more competitive and accessible.
Neutral shared branches
Formed in May 1998 during "a period of high bank branch closure activity," the CCBS were a coalition of 20 UK charities. Their mission wasn't simply to stop branches from shutting their doors, but to sustain local commerce, tackle financial and social deprivation, and to help the vulnerable.
With these aims at the forefront, their campaigning and activism were instrumental in achieving several victories. Chief amongst these was the 80% fall in (non-merger related) branch closures that happened between 2001 and 2008.
Another notable achievement was their contribution towards expanding the ability of current account holders to use their local post offices to withdraw and deposit money into their accounts.
However, since the 2008 recession and the restructuring of the financial sector that followed it, the pace of closures resumed accelerating. In 2013 there were 222 bank closures, surpassed by 500 in 2014 and then 681 in 2015.
It's this acceleration that has brought French and his colleagues to the point where they've admitted defeat. In the face of the increasing migration of banking to the internet and continued economic pressures, they've accepted - whether realistically or pessimistically - that local bank branches will become a thing of the past.
They did try to convince Government and financial institutions that the answer to this problem was the opening of neutral shared branches. These would see banks pooling their resources together to provide a centre in which they could all be reached by their customers.
Unfortunately, while their proposed model was "academically validated as 'operationally feasible and financially viable'," it was never taken up with much enthusiasm by the Government or the major banks. Indeed, the British Banking Association (BBA) stated in 2005 that they didn't believe a "network of white label outlets would be useful or cost-effective."
Competition and choice
BBA approval or not, the rejection of shared branches and the death of the CCBS is something of a loss for banking reform. This is especially true in light of the Competition and Markets Authority (CMA)'s current efforts to make retail banking more competitive.
Without the CCBS striving to keep bank branches open, and with their main solution to closures being ignored by the CMA and the banks, it's highly likely that retail banking will become less competitive.
As the coalition have repeated countless times in the past, there are certain sections of the UK population who rely on brick-and-mortar branches to do their banking.
These include the elderly and the deprived. Without access to physical branches, such people will have no opportunity to change their accounts, no matter how seamless or intuitive banks make their websites.
This is why the disappearance of branches from high streets and rural areas is a bad thing, since without them many people won't be able to exercise choice. And without exercising choice they won't be able to put pressure on the banking industry to become more competitive, as the CMA want.
In fact, it's not only the digitally excluded who need branches to be within reasonable distances of them.
A 2015 report by the Aite Group discovered that only 23% of new current accounts are opened online in the US. What this means is that many people still want or need to be able to physically access a branch of their desired bank before they move their account to it.
As such, with the closure of so many bank branches and the untimely passing of the CCBS, the banking sector is now going to have to work doubly hard if it wants to become competitive for all potential customers.