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Four million older people at risk of ‘financial exclusion’ as bank branches close at pace

Paloma Kubiak
Written By:
Paloma Kubiak

Four in 10 people over the age of 65 – equivalent to 4.09 million people in the UK – aren’t managing their money online and could be at high risk of financial exclusion, a charity warns.

More than 200 bank branch closures have been announced this year, joining hundreds which have shuttered over the last few years as the popularity of digital banking booms.

However, a third of older people with a bank account – around 3.25 million people – feel uncomfortable with online banking, despite the shift.

According to charity Age UK, three quarters of over-65s want to undertake at least one banking task in person at a branch, building society or Post Office.

As part of its ‘You can’t bank on it anymore’ report, it revealed that those aged 85+, female, on a low income or more disadvantaged than their counterparts were most likely to feel uncomfortable using online banking.

A fear of being defrauded or scammed, as well as a lack of trust in online banking services and a lack of IT skills were cited as the main reasons.

Banking hubs

Age UK is calling for the protection of physical banking services for those who don’t or can’t bank online.

It also wants to see an accelerated roll-out of shared banking hubs in areas where bank branches are deserting high streets.

The charity said when loyal bank branch users heard of the hubs, half said they would be comfortable using them as a main place to manage their money, “a surprisingly high proportion, given that most of us are yet to experience one of these new settings”, it said.

According to LINK, the ATM network, there are four banking hubs open in Brixham (Devon), Cambuslang (South Lanarkshire), Cottingham (East Ridings of Yorkshire) and Rochford (Essex), while 47 further hubs are on the way.

Caroline Abrahams, charity director at Age UK, said while banking hubs provide face-to-face contact for customers, the concern is that there can be “too long a delay” between bank branches shutting down in an area, and a new banking hub becoming operational.

“To be fair to the banks, it takes time to establish a banking hub and get it going, but maybe we need a new rule whereby if they want to close a branch, they have to provide communities with enough notice for a hub to come on stream before all the traditional face-to-face banking services there disappears,” she said.

Physical banking spaces need to exist

Age UK said that physical spaces, whether a bank, building society, banking hub or alternative provision must continue to exist so people can carry out face-to-face tasks such as withdrawing and depositing cash, applying for a loan, arranging third party access to their account, or starting bereavement proceeding.

With the disappearance of face-to-face banking, it risks cutting a significant minority of the older population out of an essential service. This makes it difficult for them to manage their money and maintain their independence.

Meanwhile, around 2.4 million older people are reliant on cash, meaning an inability to access cash locally can result in them feeling frustrated or left behind. For many others, cash is an effective budgeting tool.

As such, Age UK said it is “imperative that HM Treasury recognises the importance of protecting physical banking services”.

It urges the Treasury to include provision to ensure continued access to face-to-face services.

‘Huge demand for face-to-face banking services’

Abrahams said: “We need to face up to the fact that huge numbers of older people, the ‘oldest old’ especially, are not banking online. Even older people who do bank online often want the ability to talk to a bank employee in the flesh about some kind of transaction. These findings demonstrate the huge and continuing demand for face-to-face banking services among our older population, and it’s crucial the banks respond. Otherwise, they are effectively disenfranchising millions who are willing and able to manage their finances – just not online.”

She added: “It seems however that the era of every bank having its own local branch is nearly over. The good news is that this need not spell the end of face-to-face banking, provided shared banking hubs can be established to take their place.

“The ability to manage your own financial affairs is something that many older people understandably hold dear, and it is extremely upsetting if you find your capacity to do this is being removed because your local bank branch is shutting down and you can’t easily get to another one. We know some older people in this position feel belittled and discounted, which is hugely unfair and undesirable, yet something that can be avoided if the banks get their act together and establish shared banking hubs in a timely and effective way.”