Small firms hit by bank closures
Many small businesses are running in to difficulty as a result of the closure of local bank branches, according to new research from the Federation of Small Businesses.
The lobby group has claimed that the majority of these firms deal with cash or cheques and that they face “tough challenges” when regional banking services are unavailable.
Research suggests that the number of UK bank branches has halved to around 8,000 during the last 25 years, while the FSB adds that more are set to close.
Smaller firms often value the face-to-face interactions that come with dealing directly with a local branch.
A lack of appropriate facilities
In situations involving complex financial transactions, having staff on hand that understand the business environment and the local economy are sought-after by small businesses.
The FSB has also suggested that although small firms are keen to embrace the rise of the digital economy, they face a number of barriers.
Unreliable broadband and a lack of confidence were the most common issues faced, as both limit the degree to which businesses are prepared to try digital banking.
Not using these facilities, and being unable to carry out transactions in branch, is making financial management a tougher ask for smaller firms.
Any business with concerns may wish to undertake an independent business review to gain insight into their financial standing and processes.
Bank closing under review
Banking processes are also currently under review – a study into an agreement signed by banks that relates to what they should consider before closing the last branch in a specific area is underway.
Under the set-up, banks are required to consider the proximity of other branches and this includes a number of factors, such as the age profile of branch customers, access to public transport and wider mobility issues.
A problem with the current agreement is that banks are not punished if they fail to provide an alternative when the last branch shuts, which hits businesses and individuals as they are unable to access services.