Last month, a report into banking services revealed that the pace at which retail banks are closing their branches is speeding up, as going digital proves to be more lucrative. There will be 650 closures expected this year, up from 500 branches in 2014 following 222 in 2013.
The bank closures were always going to have a detrimental impact on the high street with people preferring to go shopping somewhere where they will be able to carry out banking related activities. Now, a new study has revealed the effects the bank branch closures have on independent retailers on the high street. It shows that independents suffer far more from closing high street banks than their chain store counterparts.
People want to shop and bank at same time
A third of independent retailers say that customers have started shopping elsewhere so as to be able to bank and shop at the same time, while only 11 per cent of chain stores say so, according to the research from Cardtronics UK’s ‘Value of Cash on the UK high street’.
This is echoed by the 24 per cent of independents who said that there has been a decline in footfall because of fewer banks on the high street, compared to only seven per cent of chain stores.
A quarter of the smaller shops believe that their profits have been negatively impacted by the decline of access to cash on their high street (vs. 11 per cent chains) and a similar number (24 per cent) feel under increased pressure to provide the services that bank branches used to offer compared to 15 per cent of chains.
Less cash, more problems
However, lower profit margins are not the only way that independents have been affected. There is a perceptible change in how people pay as well, suggesting that Closing high street banks, lack of access to cash and changing payment habits go hand-in-hand.
Three out of ten independent retailers have said that that their customers have less cash to pay with because of closing banks, compared with only 15 per cent of chain stores, and over half (51 per cent) of independents said notice more people tend to pay with card because of no cash access (vs. 39 per cent of chains).
This is a huge problem for smaller shops as 61 per cent of independents say their business still relies heavily on cash payments as opposed to 31 per cent of chains.
This is because investments into new payment technologies are not a guaranteed success with only 27 per cent of independents saying that their investments into new payment tech during the last two years had a positive impact on their business performance. Just 31 per cent say otherwise (chains 36 per cent agree vs. 31 per cent disagree).
The Emerging Payments Association discuss the impact of Brexit on the fintech industry at the latest payments industry event.
Jonathan Quin, co-founder and CEO of World First, explores how established financial institutions and newer fintech disruptors stand to benefit from collaborating with one another in the fast-moving financial services sector.
With advancements in technology and the subsequent availability of data, it seems surprising that banks seem to know less about their customers than ever before.