Banks hurting small businesses with branch closures, claims FSB
26 Oct 2016
Small firms are being ‘let down’ by local bank branch closures, according to the Federation of Small Businesses (FSB).
In a new report, the FSB claims that, in the last 25 years, the total size of the branch network has halved to just over 8,000 branches and is set to halve again in the next ten years.
Mike Cherry, National Chairman of the FSB, stated: ‘The rapid pace of bank branch closures across the UK presents some very real and tough challenges for small businesses. FSB 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.’
The report also notes that many small firms deal heavily in cash and cheques, and therefore need access to over-the-counter banking facilities on a regular basis, rather than relying on internet banking.
Mr Cherry commented: ‘Small businesses are keen to embrace the opportunities of the digital economy – 94% of small businesses already use internet banking. However, barriers towards digital inclusion, such as unreliable broadband connectivity and a lack of confidence in using digital services creates serious challenges. These are some of the reasons which explain why the protection of in-branch banking is so important for financial inclusion.’
The FSB calls on the Government and the banking sector to improve small business awareness and confidence in the Access to Banking Protocol, which was introduced in March 2015 to ensure that customers were offered alternative ways of banking in their local area if a branch closed down.
According to the FSB, there is ‘extremely limited awareness of the Protocol’ and businesses ‘urgently need a strengthening of the Protocol to ensure banks undertake a proper consultation process, engage with small businesses affected by branch closures and provide appropriate banking service alternatives’.