Can Shared Banking Hubs prevent the financial exclusion of the elderly?
4 in 10 older people in the UK do not manage their money online and could be at high risk of financial exclusion, according to research by Ipsos for the charity Age UK.
While banks continue to reduce their branch networks, a growing number of elderly people may find themselves struggling to find financial services and advice close to their homes.
According to Age UK, Shared Banking Hubs may be the right solution to tackle the problem. Unfortunately, right now, there are only 4 of them in the United Kingdom.
What is a Shared Banking Hub?
A Banking Hub is a space open to the public, quite similar to any bank branch. There is one key difference: it serves the customers of all banks.
In a Banking Hub, you will find a counter service, operated by Post Office staff, for all cash-related operations, like deposits and withdraws, bill payments, and any other regular banking transaction.
Some private talking areas allow customers to meet with a consultant from their bank and discuss more complex issues. Different banks will be managing each talking area on a rotating basis.
Thanks to a public schedule, everyone knows which bank staffs the consultancy offices on different days.
Why Shared Banking Hubs could help
According to a recent poll by Age UK (You can’t bank on it anymore), about 75% of over-65s with a bank account would like to undertake at least one banking task in person. The thing is, the elderly are not at ease using online banking.
It may be because they lack technical skills, or they just feel uncomfortable using an electronic device on their own. Sometimes, it is out of sheer mistrust of the internet.
Either way, more than 7.5 million people in the UK would like to have access to financial services in the real, tangible world.
On the other hand, banks want to reduce the number of expensive physical touchpoints, as younger customers prefer digital channels for daily banking operations like payments.
Why are bank branches closing in the UK?
According to banks, branches are just not economically sustainable.
The data provided by Age UK shows that there is a real demand for in person banking service. The problem is, this demand may not be sufficient to guarantee the profitability of a physical branch, for two reasons:
- Daily routine banking operations take bank tellers a relatively long time, that could be used for more profitable activities, that can be priced with higher fees; the aggregated demand for in person banking service is high, but it is divided and spread on a wide territory, often in small towns.
- Banks are then reducing their networks, asking customers to refer to the closest branch in the area in the case they need consultancy, or prefer to carry a task face-to-face.
The “closest branch” is, unfortunately, often some miles away: an unsurmountable problem, for older people who rely on public transportation. They just cannot reach the closest branch without help, and cannot use digital channels. The risk of financial exclusion is extremely high.
Shared Banking Hubs could meet the needs of both banks and customers, providing a basic daily banking service to everyone, and consultancy on a weekly schedule. About 5.1 million people in the UK declared they would feel comfortable using one of them.
Still in trial
At the moment, there are only 4 operating Banking Hubs in the UK, but about 50 more are planned to open in the near future. We are talking about a pilot format, something more than an experiment, but that must still be reckoned as a structural tool to grant financial inclusion.
The roll-out process of a Shared Banking Hub, for example, could be accelerated in order to protect local communities. Many towns could soon find themselves in the middle of a banking desert, with no branch and no ATMs.
A shared Banking Hub, says Age UK, should be established before the last bank branch in an area shuts down, so to ensure the continuity of face to face banking services.
It is a matter of cooperation between banks and other companies. It comprehensibly takes time for banks to reach an agreement on where and how to set up a Banking Hub in a town, not to mention how to organize its schedule and its management.
Therefore, maybe some parts of this process could be sped up, thanks to nation-wide agreement that defines basic rules and provides guidelines.
Access to Cash in the UK
Age UK also call to authorities to recognise the important role of cash. 2.4 million older people in the country rely on cash for their purchases. Cash is essential to their financial inclusion.
A Banking Hub model, supported by a network of ATMs, could provide local access to cash all over the country. The alternative is to abandon older people to the risk of frustration and the sense of having been left behind.