(Title Image: National Assembly of Wales/Crown Copyright)

Economy & Infrastructure Committee

Access to Banking (pdf)

Published: 17th October 2019

“The Committee’s earlier work on town centre regeneration highlighted the impact of bank branch closures on the vitality of the high street generally, and how it is changing. Those still invested in the high street – such as building societies – are changing the way they engage with customers and communities to try to keep the high street alive, but we should not underestimate the challenges.”

– Committee Chair, Russell George AM (Con, Montgomery)

1. Use of cash remains high, but bank closures have restricted access to ATMs

LINK – a non-profit organisation which manages an ATM network – said that 47% of customers still relied on cash and for 17% of people (especially the elderly and people living in rural communities) a cashless society “would present real challenges”.

Half of the respondents to the Committee’s survey said bank closures had restricted access to ATMs and other free cash withdrawal facilities – for 29% it meant travelling for up to an hour. It was also pointed out that removing bank branches and ATMs restricts tourist spend in rural Wales.

The Payment Systems Regulator said 80% of people still use cash on at least a weekly basis and Which? research showed 48% of Welsh consumers had experienced a time where they could only pay for something with cash. Nonetheless, the use of cash as the main means of payment has halved in the space of 10 years with only 30% of all consumer payments being made with cash.

The Committee made several recommendations including ensuring free-to-use ATMs remain in place where they’re needed the most and ensuring local development plans address any barriers to maintaining cash infrastructure.

2. Bank closures have a huge effect on local economies and the alternatives are far from perfect



Bank closures are no longer restricted to rural towns and villages in Wales and it was said that a bank closure can effectively drain money from smaller high streets to those with physical access to a range of banking services. It also means experienced bank managers – who understand things like managing farm finances or supporting smaller businesses – are often lost for good.

Customers are often “informed” of a closure instead of actively consulted and there was no requirement to consult when banks cut opening hours – reduced opening hours often said to be the precursor to eventual full closure.

Evidence to date showed that alternatives to bank branches – the Post Office, mobile branches, online banking and credit unions – cannot fill the gap left by the closure of a bank branch.

Older people distrusted online banking and banks often fail to understand that people often don’t have smartphones or internet access. Mobile banks were seen as more helpful by customers – but it puts staff at greater risk of assault and robbery – while they sometimes miss smaller villages completely.

The Post Office can cover basic banking services, but payment clearance can be slower and some banking functions – like transferring money between accounts or making enquiries about financial products -can’t be done. It’s a similar story for credit unions.

3. Detailed plans need to be in place to convince the Committee that a community bank could work



The First Minister included the establishment of a “community bank” in his 2018 leadership manifesto and Banc Cambria has drafted plans to establish a mutual bank based on an as of yet untested “bank in a box” model developed by the Community Savings Bank Association.

Mutual banks are commonplace in the rest of Europe and Banc Cambria said it intends to start opening branches in 2021 (in areas impacted by bank closures and financial exclusion), aiming to be profitable by the end of 2026 based on an estimated 40,000-50,000 customers. They also estimate it will cost ~£20million to set up and the Welsh Government recently approved £600,000 in seed funding for Banc Cambria.

Banc Cambria’s Mark Hooper said the bank intends to offer business and personal current accounts (savings accounts weren’t specifically mentioned), personal loans and hopes to eventually offer mortgages – though it wouldn’t issue credit cards or mortgages for second homes and buy-to-lets.

There were mixed views on whether this was feasible. Principality Building Society said the costs of setting up any kind of bank were high. Other witnesses said there were many regulatory hurdles to overcome and there were ready alternatives such as making better use of the Post Office, developing “financial hubs” by collaboration between different banks and strengthening the credit union sector.

Some credit unions expressed concern that a community bank would be direct competition for the same customers. Bank Cambria said they were trying to fill a space left by the big banks and saw opportunities to work with credit unions – such as renting space from credit unions to install Banc Cambria ATMs.

The Committee didn’t express strong opinions either way on a community bank as a principle. They did, however, expect the Welsh Government to undertake full due diligence for the potential risks and long-term commitments resulting from their involvement and added that the timescales given were “ambitious if not unrealistic”.