The head of the UK's financial watchdog has revealed a significant shift in strategy among some of the country's biggest banks, with several now publicly pledging to keep their high street branches open for years to come.
A Commercial Shift on the High Street
Nikhil Rathi, the chief executive of the Financial Conduct Authority (FCA), addressed the Treasury Committee on efforts to preserve in-person banking services. His comments come against a backdrop of widespread branch closures that have left many communities with diminished access to banking and cash.
However, Mr Rathi noted a changing commercial landscape. "It's interesting how the commercial decisions are starting to change," he said. "You're starting to see more of the major financial institutions actually seek to make a virtue of the fact that they're going to keep branches open for a certain period. That is a shift."
Major Banks Make Long-Term Commitments
When pressed for examples by the committee, Mr Rathi pointed to recent announcements from two banking giants. Nationwide Building Society has pledged to keep all 605 of its existing branches open until at least 2030.
Similarly, HSBC has committed to maintaining its current branch network until at least 2027. These promises mark a notable departure from the relentless closure programmes seen in recent years.
The FCA chief also highlighted the role of smaller, community-focused institutions. He cited the example of Manchester Building Society, which recently opened a new branch in central Manchester, including weekend services, to serve a community lacking access. "Mutuals are very present in their communities and offering more services," Mr Rathi added.
Regulations and Alternative Solutions for Cash Access
The regulator is operating within a specific framework set by Parliament regarding access to cash. Since 2024, banks wishing to close a branch have been legally required to assess the impact on local deposit and withdrawal services.
Mr Rathi emphasised that the solution is not solely about keeping traditional branches open. "The settled position was there can be a range of ways in which access to cash can be provided," he explained.
These alternatives include:
- Using Post Office counters
- Shared banking hubs in areas that have lost branches
- Special deposit solutions for small businesses
The cash machine network LINK is tasked with conducting detailed community assessments to determine the most appropriate solution for each area. Mr Rathi acknowledged that rural communities and vulnerable customers, who may struggle to leave their homes, face particular challenges that require tailored support beyond simple in-person services.
The message from the FCA is clear: while some major banks are now marketing their branch networks as a key virtue, the future of face-to-face banking and cash access will rely on a flexible mix of traditional branches and innovative community-focused alternatives.
