Of course, banking is also a business and therefore subject to the pressures and responsibilities of any business to remain compliant and profitable.
However, I would argue that their existence is entirely down to the loyalty of their customers. Yet, customer loyalty is being stretched by the seemingly endless IT problems and closure of branches and ATMs that inconvenience customers, particularly SMEs in rural areas.
Most recently, TSB, encountered yet another IT failure, just a year after the mammoth meltdown which cost it an estimated £366m. To compound the distress for customers, it has just announced that it intends to close another 86 branches, cutting up to 400 jobs over the course of next year.
IT failures have not been confined to TSB, however, and in 2018, the Financial Conduct Authority (FCA), said the number of incidents reported to it had increased by 187% in the past year, 65% of which were from high street banks.
This has prompted a committee of MPs to call for faster action in resolving complaints and awarding compensation, along with more decisive regulatory action, calling the current situation unacceptable.
According to the consumer organisation Which? “Banks and building societies closed a total of 3,312 branches in between January 2015 and August 2019, with an average of 55 closing each month”.
Which? has been tracking the closures and its breakdown shows 1,094 for the RBS Group (NatWest, Royal Bank of Scotland and Ulster Bank) and 569 for the Lloyds Group (Lloyds Bank, Halifax and Bank of Scotland) while it estimates that Barclays has closed approaching 500, although the bank has declined to share figures with Which?
In addition, the organisation has found that 5,000 free-to-use ATMs had been lost between January 2018 and May 2019, the vast majority in rural and more deprived areas.
But it has not only been IT failures and branch closures that have arguably reduced trust in banking.
Only last month, Barclays announced its debit card holders would be able to deposit money but not withdraw cash from a post office counter from January 2020 as a cost saving measure to save £7 million. Following a huge outcry that situation was quickly reversed.
Nevertheless, it was an indication of the general attitudes of the traditional High Street banks given the number of branches and even ATMs that have been disappearing from villages and towns throughout the UK, on the tenuous argument that customers prefer to bank online. And despite the well-known unreliability of internet connections in such locations.
It all adds up to a massive headache for anyone who lives or works outside of a main city location.
So it is with some scepticism and a few hollow laughs that we note the latest Government initiative, a SME Financial Charter, to which, approximately 20 banks and financial service providers have signed up.
The charter is aimed to support SMEs through Brexit and signatories make five pledges:
- We’re open for business and ready to lend;
- We’ll help you prepare for Brexit and beyond;
- We’ll support your application and signpost other options if needed;
- We’ll treat you fairly at all times;
- We’ll work with the government-owned British Business Bank to support SMEs.
The charter is voluntary and clearly limited in scope.
It would have been more to the point if it had been an ongoing pledge, not confined to helping SMEs with Brexit and its aftermath, and if it had been given some regulatory teeth to encourage High Street banks to offer a real service to SMEs and other customers.