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Concerns Over Financial Inclusion Gap in Rural Areas Amid More Bank Closures

Lloyds Banking Group is shutting down its mobile van banking service this year and closing 123 branches, sparking concern over reduced access to essential financial services, particularly in rural and underserved areas.

According to Lloyds, each mobile branch helps 14 customers on average, with visits falling by 90 per cent since 2018 and some locations having as little as two customers. The banking group also claims only eight per cent of its customers chose to use a branch exclusively to manage their money.

Lloyds says it will be sending out 32 more community bankers to provide face-to-face banking support in areas where a mobile branch is stopping, alongside the existing network.

Limited access
Sam Richardson, deputy editor of Which? Money,
Sam Richardson, deputy editor of Which? Money,

Which? is unhappy with Lloyds’ decision to stop its mobile van banking service.

According to research from Which?, nearly three million people will live in a parliamentary constituency without a physical bank branch by the end of the year.

Banks and building societies have closed rapidly in recent years, with more than 5,800 branches shut since 2015 – a rate of around 54 each month and more than half the branches that were open at the start of 2015.

Lloyds Banking Group, made up of Lloyds Bank, Halifax and Bank of Scotland, has already shut down 1,072 sites. NatWest Group, which comprises NatWest, Royal Bank of Scotland and Ulster Bank, has also closed 1,333 branches – the most of any banking group.

Sam Richardson, deputy editor of Which? Money, said: “While the decision to shut any form of bank branch is a commercial one for individual firms to take, Lloyds’ decision is particularly disappointing given these vans were meant to serve rural areas with limited branch coverage.

“It highlights why we need strong regulator involvement, to ensure that alternatives such as shared banking hubs are more quickly rolled out, and then properly maintained.

“Alternatives like banking hubs could help plug the gaps, but they are being rolled out too slowly, so more must be done to ensure communities get these replacements for their closed bank branches as soon as possible.”

Concerns of older market

Chums, a brand dedicated to serving the mature market for the past 40 years, reports that less tech-savvy members of society express concerns about being left behind by the shift towards digital banking-only systems, according to its research.

One of its members, a 78-year old man, admitted to struggling with the two-step verification process to access his online banking. Even with guidance from family members, he struggled with what many would consider simple processes, such as making a one-time payment or setting up a direct debit through online banking.

While another septuagenarian customer expressed his frustration with banks’ closures, stating that three of his local banks have already closed their doors, with a fourth scheduled to close in the new year as he often forgets his passwords and cannot remember where he wrote them down.

Banking deserts
Nicole Valentine, fintech director at think tank Milken Institute
Nicole Valentine, fintech director, Milken Institute

Nicole Valentine, director of the fintech at Milken Institute, an independent economic think tank, stressed the urgent need for collective attention to bridge financial disparities in underserved communities and promote accessibility through technology.

“Unfortunately in 2024, with the many financial services pathways that households and entrepreneurs have, banking deserts still exist,” she commented. “Communities that have little to no access to banking and financial services need our collective attention and focus.

“Where technology is an enabler for those with access to digital and mobile banking, there are communities that have less connectivity when there’s a tech only platform. As a society, we need to invest in and stay committed to closing the disparities across our financial system that affect rural and other underserved communities. That starts with a definition of financial inclusion that enables economic agency over one’s financial activities in a way that is affordable, accessible, and impactful.

“Government regulators should step in when there are gaps in delivering banking services. When banking institutions pivot and reset, there’s an impact to the end user. Having a financial inclusion mission means staying the course and keeping the tools for economic mobility in play. Any other course should not be an option.”

Benefits of online
ints Silicon Valley Veteran Herman Man to Chief Product Officer | Bluevine
Herman Man, chief product officer, Bluevine

However, while many traditional banks are grappling with branch closures and the challenges of maintaining physical access to financial services, some digital banking platforms like Bluevine are championing the benefits of going completely online.

According to Herman Man, chief product officer at BlueVine, embracing digital banking not only provides more flexibility for customers but also enhances financial inclusion by breaking down geographical barriers.

“We are firm believers that branch banks are not the answer to providing better, more personalised customer service, especially as customers like business owners increasingly untether themselves from the branch bank ecosystem due to a myriad of reasons,” he said.

“One of the main barriers to access has been the fact that services are only provided through face-to-face encounters — meaning if you aren’t based near a branch or don’t have time during traditional banking hours, you are disadvantaged and lack economic opportunities.

“Moving the banking ecosystem fully online allows for more customers to access any service as they need it and on their own time. At Bluevine, inclusive banking is at the core of our services, and we’ve worked to ensure that our digital banking experience allows our customers to access services like access to capital and credit via digital channels.

“Customers like small business owners should be focused on growing their businesses, and digital banking services offer them the flexibility to bank on their own time.”


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