Research and reports
Banks and building societies have closed (or scheduled to close) 5,233 branches since 2015, according to research from consumer champion Which?. This impacts access to cash for small businesses.
Which? says that this rate is equivalent to 54 closures each month. To protect both consumers and businesses, the Financial Conduct Authority (FCA) has updated its guidance for banks to cover partial closures as well as full closures.
Bank closures affect small businesses in a number of ways.
When businesses can’t use services like ATMs and face-to-face cashiers, they can’t access cash as easily.
This is a problem. While the Bank of England says that the pandemic has caused some to shift “permanently towards digital payment methods”, it also notes that “cash remains an important payment method in the UK, and a critical means of payment for many people.”
These include vulnerable consumers (for example, lower-income households without access to the internet) or those who are less digitally aware.
A July 2022 Bank of England survey even revealed that “one in five respondents consider cash to be their preferred payment method, and so use it day to day.”
With customers still relying on cash, businesses should protect it as a payment method as much as possible. But bank closures can make this difficult.
Lisa Shanks, of Goodfellow and Steven Bakery in Brechin, Scotland, told the BBC: "Now the bank's shut, we have to phone head office to order our change, then we don't get it until the next day. It's awful."
Bank closures also affect small businesses in terms of lost high street footfall. In the same BBC report, Gavin Brymer of Brechin said: "We would never get by on what comes through the door nowadays…we had to move online and into wholesale to survive."
Inevitably, some areas will be harder-hit than others. More rural communities that don’t have easy access to other branches will be more affected.
Which? has a useful tool that you can use to find out whether your local bank branch is closing or has recently closed.
Its guide shows the banks that have closed the most branches since 2019, as well as the most impacted areas.
You can also check which parliamentary constituencies have lost the most branches. According to Which?, these areas have no branches left and have lost 100 per cent of their bank network:
Organisations like Which?, UK cash machine network LINK, and the FCA are making sure that banking customers know which ones are closing branches (and when). They’re also taking steps to assess the impact of bank closures on the community.
For example, LINK has been asked to review the community’s needs once it’s been told about a branch closure. It’s also created a handy table that lists the bank branch closures that have been publicly announced in 2022.
The FCA also updated its guidance for banks in October 2022, setting out expectations when they’re considering either closing a branch or partially shutting down services (for example, removing ATMs). The bank should analyse:
Finally, new ‘banking hubs’ could not only protect access to cash, but help revitalise high streets.
These hubs provide shared services, with staff from different banks working there on rotation. There are two hubs currently being piloted, in Cambuslang, Lanarkshire and Rochford, Essex. A total of 27 are planned for 2023 – find out if your area is due to get one.
Read more: guide to the best business bank accounts.
We’d love to know about your experiences of bank closures and accessing cash. Let us know in the comments, or feel free to reply to our email newsletter.
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Sam has more than 10 years of experience in writing for financial services. He specialises in illuminating complicated topics, from IR35 to ISAs, and identifying emerging trends that audiences want to know about. Sam spent five years at Simply Business, where he was Senior Copywriter.
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