Introduction
As the way we bank changes some consumers are being left behind.
Digital banking is now the preferred option for many people and can offer convenience, flexibility and choice. However, for a significant number of people, face-to-face banking remains an important part of managing their finances. As banking services continue to evolve, it is vital consumers can access these services in a way that best meet their needs.
This is particularly relevant in Scotland, where geography and connectivity can create additional challenges. Rural and island communities often face less reliable digital and mobile infrastructure, making access to local, in-person services especially important.
The impact of losing local banking services
The closure of local banking facilities can have significant consequences for consumers and communities.
For some consumers, branch closures mean longer journeys to access cash or banking services, often in areas where public transport links are also limited. In some areas, people may struggle to access cash altogether, limiting their ability to pay for essential goods and services where cash remains important.
Small businesses can also be affected. Additional travel, time and costs associated with depositing cash or accessing banking support can create burdens for local businesses, particularly in rural areas where alternatives may be limited.
There is also a wider concern that consumers are increasingly losing access to trusted, personalised financial support. Face-to-face conversations can help people better understand and manage their finances, particularly when making important financial decisions or navigating difficult circumstances.
Who is most at risk from the decline of in-person banking?
While anyone may need face-to-face support at different points in their lives, some groups are more likely to depend on in-person banking services. These include:
- People living in rural and island communities
- Consumers who are digitally excluded
- Older and younger consumers
- People with limited English language proficiency
- Victims or survivors of domestic abuse
- Disabled people and those with long-term health conditions
- Low-income consumers
- People living in insecure housing
For these consumers, banking is not simply about completing transactions. In-person services can provide reassurance, personalised support and help in accessing wider financial products and services.
Looking to the future protection of services
The current framework for protecting access to cash is an important safeguard. However, Consumer Scotland is concerned a focus on cash alone may not be enough to meet consumers’ needs in the future.
Banking services encompass much more than withdrawing and depositing money. Consumers may need help opening accounts, managing debt, understanding products, dealing with fraud or receiving support during major life events.
If current trends continue, there is a risk some consumers could become increasingly excluded from parts of the economy because their circumstances make it difficult to use digital banking services. Future policy should therefore focus on access to banking services more broadly, rather than cash alone.
Building new models to ensure access
As traditional banking networks change, there is an opportunity to develop alternative models that maintain access to in-person support.
Consumer Scotland supports continued innovation through partnership and hybrid approaches that bring together banks, communities and existing service providers.
This could include greater use of shared banking facilities including banking hubs, assisted digital services and targeted support for consumers who need additional help.
Post Offices may also have an expanded role to play in providing access to banking services and supporting consumers with a wider range of financial needs.
Ensuring no one is left behind
The transition towards digital banking presents opportunities for many consumers, but it must not come at the expense of those who continue to rely on in-person services.
A banking system that works well should provide consumers with choice, ensuring that people can access the services they need in the way that works best for them.
As the sector continues to evolve, maintaining meaningful access to in-person banking will remain essential for supporting consumers, businesses and communities across Scotland.
These issues were central to Consumer Scotland’s recent response to the UK Treasury’s call for evidence on access to banking services across the UK.
We will continue to work with HM Treasury and other key bodies including the Financial Conduct Authority to help ensure all consumers can access the banking services they need.