Are banking hubs the way to offset painful bank branch closures?

High street bank branches are closing their doors at an astonishing rate. 

In 2023, there were just 5,745 bank branches in full operation, down from more than 13,000 in 2012, according to a House of Lords study.  

The speed at which they’re closing isn’t slowing either, with the FT reporting that around one in eight of the branches open at the start of 2023 were to have closed by December. 

But in their place, a new type of bank branch is popping up across the country: banking hubs.  

These are designed to plug the gap left by closed branches in the community. In theory, you should be able to do many of the things you could have done at your local bank branch at one of these hubs — but it doesn’t work for everyone. 

What are banking hubs? 

Owned by the charity Cash Access UK, funded by the major banks and run by the Post Office, banking hubs aim to be a one-stop-shop for your banking needs. 

If your bank has signed up, you can pay in cash and cheques, withdraw money, check your balance, pay utility bills, top up your gas and electricity and, if you’re a small business, access change-giving services at the counter. 

If you are a customer of one of the major banks, then it’s likely a ‘community banker’ can help you do more complex tasks too, such as registering a bereavement, adding a power of attorney to your account and provide fraud support or debt advice.  

Which banks are involved? 

The banks funding the project are: Bank of Ireland UK, Barclays Bank, Danske Bank, HSBC UK, Lloyds Banking Group, NatWest Group, Santander, TSB and Virgin Money. This means that their customers are served by the banking hubs when they emerge. 

Nationwide Building Society was involved until the start of 2024, but decided that, from January, it would serve its customers through its own branches.  

Banking hubs can now launch in towns where there is still a Nationwide bank (the rules state that banking hubs cannot be created where one of the members has an existing branch). 

Cash Access UK says it’s open to the idea of any bank or building society joining its member panel if they meet certain criteria, so it’s possible that customers of smaller banks will be able to use banking hubs soon. 

In a typical hub, the banks with the most customers in the area will send a community banker on a dedicated day of the week. For instance, at one of the early banking hubs to be opened in Acton, London, the schedule is as follows: 

• Mon: NatWest 
• Tue: Barclays 
• Wed: Lloyds 
• Thu: HSBC 
• Fri: Santander

Where are these banking hubs? 

Rochford, in Essex, was one of the first places for a banking hub to launch as part of a trial scheme back in 2021. It’s still open, and since then more than 35 banking hubs have launched in the UK. 

A further 60 are expected to be created in 2024. Barnoldswick in Lancashire recently opened its doors, with community bankers from NatWest, Santander, Lloyds, Barclays and HSBC, and new hubs have also recently opened in Shoreham-by-Sea in Sussex, Barton-upon-Humber and Newton Aycliffe. 

More are set to be opened. Link, the organisation which oversees the UK’s cash machine network, conducts a review whenever a community loses a banking service and it recently recommended that more than 80 new hubs should be established across the UK. 

Labour has pledged to open a further 350 banking hubs if elected. You can see whether there’s a banking hub coming to a town near you on the Cash Access UK website. 

What do the critics say? 

Banking hubs have largely been welcomed for returning bank services to branch-strapped areas. Charity Age UK stated that hubs had worked “extremely well” and they’d proved popular with local communities. 

Nikhil Rathi, the chief executive of the Financial Conduct Authority, the financial services regulator, said in 2022 that he wanted to see the provision of banking hubs accelerated. 

However, there are some concerns about the length of time it’s taking for banking hubs to be launched. Age UK has highlighted how there’s typically a long delay between bank branches shutting down and a new hub opening, leaving many communities without banking facilities for months or even years. 

"After a slow start, the rollout of new Hubs has increased and with more planned over the course of the year we remain optimistic the Hubs will be a success – initial feedback from customers certainly suggests they should be," said Caroline Abrahams, Charity Director at Age UK.

“However, there are still likely to be many people affected by branch closures who will be unable to access face-to-face services. It’s important that industry and Government come together to make sure that everyone, no matter who they are or where they live, can access banking services, without which many people find it nigh-on impossible to manage their money and remain active in their community.”

On top of this, customers of smaller banks may be left at a disadvantage if they do not have access to a community banker. However, smaller banks were also less likely to have branches available in every town before. 

Why are bank branches closing in the first place? 

Put simply, they’re expensive to run and fewer customers are using them regularly. 

Banks are obligated to publish an impact assessment when they close a branch, explaining how customers use it, where their customers may be able to bank instead and how close it is to other cash machines. 

Quite often, these reports show that fewer than 100 customers are using these branches regularly, but the bill for keeping branches open can reach more than £500,000 a year. 

Going digital 

The shift to online banking is behind the drop in bank branch users and ultimately, their closure. 

Online banking is making life easier for lots of us, but there will always be some sticking points. 

Some banks, such as Barclays and Lloyds, allow you to pay in a cheque online (although there is often a limit on the size of the payment), but customers of other banks will need to head to a Post Office or send it in the post.

For making large transactions, where there may be a risk of fraud, you might also feel more confident carrying it out in branch, which is where banking hubs remain necessary.  

While it’s good to have the option of in-person banking, if you need to perform a complicated task quickly, you might have to wait for your bank's weekly ‘slot’ or travel to a branch still open. 

More complicated transactions, like setting up an account for a child or registering a power of attorney, usually must be done in-branch — so, if you have one in your town, this will now be in a brand-new banking hub.