Bank branch closures hit small firms, says FSB

Small businesses - many of which deal in cash and cheques - face "tough challenges" owing to the closure of bank branches, a lobby group has said.

The UK's bank branch network has halved to just over 8,000 in the past 25 years with more set to close, the Federation of Small Business (FSB) said.

It said that companies were being let down as they valued face-to-face interaction with staff.

A protocol among banks regarding branch closures is currently being reviewed.

Digital barriers

FSB chairman Mike Cherry said that many small businesses needed over-the-counter banking facilities.

"Our 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," he said.

He added that the main reason for branch closures - the popularity of digital banking - presented its own challenges.

"Small businesses are keen to embrace the opportunities of the digital economy," he said.

"However, barriers towards digital inclusion, such as unreliable broadband connectivity and a lack of confidence in using digital services, create serious challenges."

Protocol

A review is currently being conducted into the agreement signed by banks over what they should consider before closing the last bank branch in a town or village.

Banks must think about the proximity of alternative branches as part of a 12-week consultation before a closure. Proximity can be very different, depending on the mobility of customers, ranging from young car drivers to older people reliant on public transport, so the age profile of the branch's customers will be part of the review.

However, under the current agreement - which was signed by banks, the government and consumer groups - there is no punishment if banks fail to provide alternatives when the last branch closes.

The Campaign for Community Banking Services says many hundreds of communities in the UK have lost all their banks.