JEFF PRESTRIDGE: Branch closures are simply the beginning. I’ve seen what’s coming… and all financial institution clients can be horrified

Over the past four years, high street banks have announced more than 2,200 branch closures as part of a push to move customers – some kicking and screaming, others valiantly resisting – towards a brave new digital banking world.

Closures are now so common that the media’s overall reaction to them is somewhat mute.

So it’s no surprise that the decision by Lloyds Banking Group four days ago to axe 95 branches across its three high street brands – Bank of Scotland, Halifax and Lloyds – warranted no more than a few paragraphs in national newspapers. Press coverage online, admittedly, was more detailed.

Lloyds is not the only bank in recent weeks to confirm forthcoming closures: NatWest and Santander have also given details of branches facing the chop.

But what merits Lloyds special attention is two things. First, the scale of closures – 95 branches compared to 32 and 44, respectively, for NatWest and Santander.

Second, and more importantly, they’re happening while Lloyds is simultaneously undermining the ‘community’ banks which the Government is banking on (apologies for the pun) to keep a semblance of banking service alive on our high streets. Town centres which, as you and I know, are currently being pulverised by a deluge of Government taxes on retailers large and small.

Joined up thinking from Labour? Fat chance. Despicable behaviour from Lloyds? Absolutely, as a mix of customers and campaigners confirmed last week when I spoke to them about the big bad wolf that is Lloyds Banking Group.

Lloyds Banking Group recently announced a decision to axe 95 branches across its three high street brands – Bank of Scotland, Halifax and Lloyds 

By limiting customers’ use of these new style community banks (often referred to as banking hubs), Lloyds is effectively sabotaging them before a national network has been fully established.

Indeed, if other banks were to follow Lloyds’ lead (banks tend to act like lemmings), it could result in banking hubs being shut, not opened. If so, it would represent a devastating blow for all bank customers, irrespective of whether they bank with Barclays, HSBC, Lloyds, NatWest or Santander – or for that matter any other high street bank.

For those who have yet to use a banking hub, let me give you a brief summary of what they offer – before explaining how Lloyds is harming them. Hubs are set up in towns where all the banks have shut their branches – but where it is believed there is sufficient customer demand to support a shared high street bank.

The decision to launch a hub is made by cash machine network Link, using strict criteria drawn up by the banks. The hubs are then constructed by Cash Access UK, an organisation funded by the big banks, and operated in nearly all cases by the Post Office.

The customer services on offer are basic, essentially centred on the banking of cash and the payment of bills. But staff from the community’s most ‘popular’ banks are on hand on specific days to assist customers with more complex banking needs.

So far, 214 banking hubs are up and running, with another 58 approved by Link and waiting to go live. Labour’s promise, outlined in its (grotesquely misleading) 2024 election manifesto, is for 350 of them to be established before it gets kicked out of power as expected in 2029.

Maybe Labour will get its 350 hubs before heading into the political wilderness, but it won’t be as a result of Lloyds’ actions.

Late last year, the bank let it be known that its customers would no longer be able to deposit cheques at a hub – or a post office. The ban kicked in from the start of this year. Instead, they would have to use alternative means: a mobile app (anathema to many customers), putting the cheque in an envelope marked ‘freepost LBG’ and trusting Royal Mail to deliver it promptly (fat chance), or using a deposit machine at a Lloyds branch (the friendliest option, provided one can be found).

Derek French, a retired bank executive and a long-standing advocate of banking hubs, told me last week that Lloyds’ move represents the ‘first blow in eroding the value of hubs as a customer-acceptable replacement for the closure of local bank branches’.

And he is dead right, based on the conversations I have had with numerous Lloyds customers in the past few days.

Among them is 72-year-old Rob Pepper, who before retiring actually worked for Lloyds for 37 years as a commercial manager.

Rob lives in Cheadle near Stoke-on-Trent in Staffordshire. The town lost its Lloyds branch in late 2022. A year later, a banking hub was launched in Cheadle before relocating to new premises at the end of 2024.

Lloyds is undermining the ‘community’ banks which the Government is banking on to keep a semblance of banking service alive on our high streets

‘Until this year, the hub was so convenient,’ says Rob. ‘I regularly receive dividend cheques from some of the investments I have, so I could just pop in and get them deposited.’

But not any longer: the hub won’t allow him to deposit the cheques.

‘I don’t use mobile apps because I consider them unsafe,’ adds Rob. ‘As for the postal service, it’s too unreliable.

‘Lloyds’ withdrawal of the cheque deposit service dilutes the purpose of banking hubs.’

What makes matters worse is that the most convenient Lloyds branch for him to use to deposit the cheques – based in Uttoxeter – is on the list of 95 closures announced by the bank four days ago. ‘You couldn’t make it up,’ he says.

Rob is not alone in feeling disenfranchised by Lloyds.

David Rayner, an octogenarian from Alcester in Warwickshire, is a regular at the town’s banking hub after Lloyds shut the last bank eight months ago.

But he’s angry that he now can’t go there to bank any cheques that he and his wife Diane receive – including (rather ironically) dividend cheques from Lloyds. ‘It seems as if we can’t win,’ says Rob, who ran his own buildings supplies business before retiring.

‘First, Lloyds shuts our local branch. Then we get a hub, which is not perfect but allows us to do basic banking – only to now be told that Lloyds is restricting what limited banking we can do there. It’s as if the bank doesn’t want our custom – just our money.’

Derek French suggests Lloyds won’t be the only bank to stop customers using hubs – and for that matter post offices – to deposit cheques. Others, he believes, will follow its lead.

He says: ‘It’s contrary to the objective of banking hubs and smaller community post offices, which is to provide people with access to basic banking services on the high street.

‘It’s an objective which Government supports, but is now in danger of being seriously undermined.

‘The more services that are withdrawn from hubs, the less people will use them – and the more reason for banks to turn round at some stage and withdraw their support for them.’

I asked Lloyds why it had stopped allowing customers to bank cheques through hubs. In response, it said that customers are using alternative ways to bank cheques, reiterating the alternative ways available to customers wishing to deposit them, which I have already mentioned.

It then added: ‘Customers want the freedom to bank in the way that works for them, and we offer more choice and ways to manage money than ever before.’

My fear is that Lloyds has set in train the beginning of the end of hubs.

I imagine the next big step – and it might not happen for a while – could be the withdrawal of banking staff from hubs on the grounds that their services are not being used sufficiently.

Sadly, I feel that we are on the cusp of a full-blown digital banking world. Banking hubs are no more than a temporary measure to appease a generation for whom high street banking is the only way to bank.

In time, certainly within my lifetime, they will be dismantled and be no more.

Confirmation of the final stage of this journey from personal to digital banking will come this week as The Connection Project updates us on how everyone can thrive in a digital society. The thought chills me to the bone.