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As bank branches close, digital channels become vital

The impact of bank closures on vulnerable customers and small businesses is difficult. The key is to provide robust, reliable digital channels to help them through it.

The impact of bank closures on vulnerable customers and small businesses is difficult. The key is to provide robust, reliable digital channels to help them through it.

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8th February 2021

Garry Larner

Bank branches continue to close. This is despite many people still preferring to visit their local bank for in-branch services. And while the Financial Conduct Authority (FCA) has guidelines for providing clear and fair communication for banking customers, these may not be fully adhered to (or difficult to implement) during periods of national lockdown. It is imperative to provide digital services to help all sorts of people, from small businesses to vulnerable customers. This applies to communication as much to financial services.

Covid-19 restrictions have acted as a catalyst to hasten the strategy of branch closures by many banks. However, branches have been closing for years driven by the steady demand for digital services that mobile and online platforms offer. British people are choosing digital banking services in droves, with a Finder survey showing “two thirds of banking customers plan to convert fully to a digital bank in the future”. Yet, the same survey reveals that only 12% of British people have fully switched to a digital-only bank. There are people that still need help in making the transition from traditional banking to digital banking.

Communication is the key to digital success

It’s clear the graph is climbing in the direction of digital services. What isn’t so clear is how customers are expected to make the leap from what they know to what they don’t know. Many vulnerable customers are in the grip of debt, especially during Covid-19, and are struggling to manage their everyday finances. Their usual port of call was a face-to-face visit to visit their local bank, which became hard when branches closed during lockdown, and harder still when they closed for good.

Likewise, many small businesses use traditional in-branch services for day-to-day banking. They have been left struggling to manage their businesses, many of which have permanently shut their doors because of the weakened economic climate. What these businesses need is care and advice, which was usually found via human interaction at a bank branch.

The impetus remains that people need guidance from all sorts of financial institutions right now, and being able to provide clear communication is vital for helping them make the transition to digital services.

Help customers navigate to digital services

Here’s what a bank needs to do to comply with standards and guidelines, to ensure customers and relevant stakeholders of a bank branch know what’s happening. There needs to be an announcement of closure at least 12 weeks in advance. They should provide clear information about where to get assistance following the closure (paying particular attention to vulnerable customers that may require additional help). Alternatives should be made clear.

Whether they’re doing a good enough job of this is open to debate, but the tools are available to take care of the above (and the numerous related specifics). Many vulnerable customers and small businesses are hard to identify and hard to contact, but this shouldn’t be an insurmountable obstacle, nor an excuse to sit on your hands.

The right approach is to embrace digital channels and encourage customers to do the same. This means having online communication channels, as well as a robust customer service department, alongside easy-to-use online services for banking, advice, and other financial services.

The impact of branch closures affects many people, but the light at the end of the tunnel is a human approach to providing digital services. We will always need branches, even if they are part of a marketing strategy for your bank, but the importance of a digital future shouldn’t be underestimated.

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