Banking Hubs.

TheBanker

TheWoodler said:

I support the idea of banking hubs and suspect that they might do very well in rural or semi-rural areas that already strongly benefit from tourism, primarily the businesses that make up the local tourist economy (and to a lesser extent, the tourists themselves). Such places are also local hubs more generally, ie they draw in people from the surrounding local area as well as further afforded. The choice of locations seems to support the idea that this is one of the factors they’re going for. 

What makes me think this is that I was recently in an attractive small country town, which is a regional tourism draw with thriving independent shops and businesses, and now a new hub. I can see the hub making the businesses more viable, while the potential individual customer base is broader than just the local population. I didn’t go in that day as it was, ironically, a BH, but I might well have popped in, if only to withdraw cash (I prefer to withdraw at inside machines, not external ones). 

I can see them evolving to accommodate other financial brands and services if successful, and, given the whole PO débâcle, I wonder if it may also be the only way the PO itself will survive. I’m fascinated by social change and it’s been astonishing to see the speed at which traditional banking has declined. 

It's an interesting question - what is the future of the Post Office? Leaving aside the behaviour that led to the current Public Enquiry, the Post Office's business has been dwindelling for years. A lot of government services, e.g. taxing cars or applying for passports are now mostly done online. Most people will pay their utility bills by Direct Debit and for those who want to pay in cash, Paypoint have taken a big share of the PO's business. It's been a long time since benefits and pensions were paid out at the Post Office, and the volume of mail is declining. I believe the Post Office has seen an increase in parcels due to online shopping, but there are many other players in that space too.

So they do need a new future and perhaps providing cash services for banks is part of it. 

Like the banks, Post Offices have changed. I remember as a kid going with my mum to our local PO to collect the Child Benefit. There was a queue through the shop and down the street on certain days, with two clerks going hell for leather to serve people. Their main business was being a Post Office - they sold some sweets and bits of stationery etc but I doubt that contributed a huge amount to their profits. That same Post Office is now just a terminal on the newsagent's shop counter without its own dedicated staff member.

And I remember going to the main city centre PO with my dad - it was a huge, grand old building that felt like a really important place to go. Now that building has been converted into flats, and PO services are provided from a couple of counters tucked away in the back of WH Smith (which is another company that one has to wonder how long they've got left...)

The decline of 'traditional banking' has accelerated, but it's not a new thing. I started working in banking just after the turn of the millenium, and when I joined the high street bank I worked for had an active branch closure programme, was pushing the use of online banking, and reducing the number of cashier positions/introducing more machines in branches. It does not surprise me that a lot of branches in the suburbs have closed, but it does surprise me that we now have some quite large towns without a single bank.

GeoffTF

TheBanker said:

It's been a long time since benefits and pensions were paid out at the Post Office, and the volume of mail is declining.

Post Office Counters Limited and Royal Mail are separate companies:
"As part of the Postal Services Act 2011, Post Office Limited became independent of Royal Mail Group on 1 April 2012[23] and, in the same month, Paula Vennells was appointed as its chief executive."
https://en.wikipedia.org/wiki/Post_Office_Limited

WillPS

GeoffTF said:

TheBanker said:

It's been a long time since benefits and pensions were paid out at the Post Office, and the volume of mail is declining.

Post Office Counters Limited and Royal Mail are separate companies:
"As part of the Postal Services Act 2011, Post Office Limited became independent of Royal Mail Group on 1 April 2012[23] and, in the same month, Paula Vennells was appointed as its chief executive."
https://en.wikipedia.org/wiki/Post_Office_Limited

Yes, but the primary function of a Post Office has always been to post things.

Rob5342

You don't even need a post office to post things these days. I usually use the Royal Mail app and they come and collect the parcel and even bring a pre printed label with them.

TheBanker

GeoffTF said:

TheBanker said:

It's been a long time since benefits and pensions were paid out at the Post Office, and the volume of mail is declining.

Post Office Counters Limited and Royal Mail are separate companies:
"As part of the Postal Services Act 2011, Post Office Limited became independent of Royal Mail Group on 1 April 2012[23] and, in the same month, Paula Vennells was appointed as its chief executive."
https://en.wikipedia.org/wiki/Post_Office_Limited

I am fully aware of that. But a large part of the Post Office's business was selling postage products and services. The clue's in the name. If people are sending fewer letters, there will be fewer customers going into the Post Office to give them an income (and potentially additional income by buying other items while they're there). 

Pete_Sussex

born_again said:

But you can always get cashback when shopping 👍

I'm not so sure - I asked for cashback in a 'big' Co-op yesterday and the cashier directed me to the ATM outside. Which, of course, had run out of paper so no receipt available ☹

TheWoodler

On the subject of banking hubs, I received a newsletter from the Newbury Building Society today. One of the articles was about a branch refurbishment, where they made the point they were the last remaining financial institution still with a High St presence at that location.

With that in mind, they were partnering with a hub provider to provide a space for basic banking services for both personal and business customers of the main banks as part of the refurb. Their partner already has a relationship with the Newcastle for similar. 

The smaller building societies all seem to be very proud of their commitment to a bricks and mortar presence - after all, their business *is* bricks and mortar! - and if they’re the last man standing in the High Street, particularly in small towns, it makes absolute sense to provide space for hub banking. I’d imagine the fees paid help enhance their own viability and it has potential for them to attract new customers too.  

WillPS

TheWoodler said:

On the subject of banking hubs, I received a newsletter from the Newbury Building Society today. One of the articles was about a branch refurbishment, where they made the point they were the last remaining financial institution still with a High St presence at that location.

With that in mind, they were partnering with a hub provider to provide a space for basic banking services for both personal and business customers of the main banks as part of the refurb. Their partner already has a relationship with the Newcastle for similar. 

The smaller building societies all seem to be very proud of their commitment to a bricks and mortar presence - after all, their business *is* bricks and mortar! - and if they’re the last man standing in the High Street, particularly in small towns, it makes absolute sense to provide space for hub banking. I’d imagine the fees paid help enhance their own viability and it has potential for them to attract new customers too.  

Seems a good idea and I hope they can make it work. My concern would be that without Post Office involvement there is presumably no way for the client bank customers to do cash withdrawals/deposits, even on the days they have a Community Banker presence?

TheWoodler

It doesn’t necessarily require PO involvement - kiosks using Open Banking technology allow customers to make deposits and withdrawals. The PO is therefore also facing competition in this sector. Cash Access UK seems to be the main player as the big bank/PO consortium, but OneBanx is the alternative fintech provider. 

So the very latest technology in the evolution of the footfall away from physical banks is now being utilised to maintain a High Street banking presence.

Here’s a case study from the Newcastle, which not only features the new kiosk technology, it also showcases how they’re partnering with community spaces such as libraries - which are also fighting to survive. It seems that partnerships in one form or another are the way forward to mutual benefit. 

https://www.newcastle.co.uk/powering-communities/reimagining-branches

TheBanker

TheWoodler said:

It doesn’t necessarily require PO involvement - kiosks using Open Banking technology allow customers to make deposits and withdrawals. The PO is therefore also facing competition in this sector. Cash Access UK seems to be the main player as the big bank/PO consortium, but OneBanx is the alternative fintech provider. 

So the very latest technology in the evolution of the footfall away from physical banks is now being utilised to maintain a High Street banking presence.

Here’s a case study from the Newcastle, which not only features the new kiosk technology, it also showcases how they’re partnering with community spaces such as libraries - which are also fighting to survive. It seems that partnerships in one form or another are the way forward to mutual benefit. 

https://www.newcastle.co.uk/powering-communities/reimagining-branches

That is great for business customers. I fear that a lot of personal customers who want to do in-branch banking are of the demographic that is less comfortable using self-service machines. Having these located in a friendly local building society is a really good idea because it means there are staff on hand who can hopefully help and provide reassurance that the money isn't going to just vanish. 

When I worked in branch banking, there were a lot of customers who were scared of using machines. They'd rather stand in a queue for 20 minutes to hand it to a cashier, so they could get a stamp in their paying in book, even though the ATM would issue them a receipt showing an image of the cheque. Ironically most of our branch errors involving missing/incorrectly handled cheques were for counter deposits. It was very rare for an error to occur with a machine-deposited cheque and if there was a problem the ATM had a much better audit trail to work out what had happened.