Access to banking services in rural Scotland

Highlands and Islands Enterprise (HIE) has published a study on the impact of potential bank closures in rural areas. The study was undertaken by the Indigo House between February and June 2018 and explored the impact of historical and pending bank closures across the Highlands and Islands of Scotland. It involved a mixed method of research including 3 different surveys for customers, businesses and community representations, with indepth consultation across 14 different communities. Case studies on communities where bank closures have occurred in recent years were also developed.

Our recommendations were:

Cash is still critical This study has clearly shown the importance of cash in rural and remote communities in the Highlands and Islands. While the direction of travel is moving to digital banking, the move in this region will be slower due to internet and mobile connectivity. Economic development policy should therefore recognise the place cash holds in these economies and support it to enable a sustainable transition to digitally based economies over time.

Digital inclusion Building on existing strategies, local partners should review and develop digital banking inclusion programmes to build capacity, confidence and trust in online banking and support financial inclusion across all types of households and banking customer. These digital inclusion strategies should include support to businesses to harness the full benefits of digital banking and digital business including promoting payment methods online.

Investment in internet infrastructure The challenge has already been identified through the planned £600m Scottish Government investment in broadband and additional investment in mobile infrastructure in the Highlands and Islands. This investment programme should recognise the need for sufficiently fast broadband to support growth and economic development in rural and remote communities.

Post office banking strategy This study suggests there is scope for the Post Office to improve on its delivery of its banking services framework, particularly through the contract Post Offices. In addition to reviewing and monitoring standards of service (including physical standards), there may be a requirement for public sector partners to develop a strategy to ensure the long-term sustainability of contract Post Offices to support the local economic infrastructure in remote and rural communities. There is also a requirement for better promotion of Post Office banking services, including awareness raising on the standards that customers can expect, and methods of redress where standards fail.

Collaborative banking hubs In considering other possible banking solutions, consideration might be given to developing collaborative branches. These could involve bank staff using existing community buildings or local authority ‘service points’ to provide part time over the counter and digital support services. In some places this may offer a better service to the current alternatives in terms of privacy, comfort and online accessibility, especially where a Post Office or mobile bank are not locally available. This may provide the opportunity to create partnerships involving local authorities, the Post Office, banks, local development trusts, community organisations and credit unions to use local premises to create a ‘banking hub’.

The Access to Banking Standard  Government should consider whether there is a need for a minimum banking service standard to supplement the existing Access to Banking Standard which only covers information provision in the case of a bank closure. A revised standard could require banks to undertake an economic impact, and equalities impact assessment for the communities in which a bank closure is proposed. The findings from this work might help influence further thinking in this respect and also opens up a wider conversation as to what banking services people should be able to expect when they reside in a remote or rural community.

September 2018 – Outcome from the study – as a result of this study and other stakeholder influence the Royal Bank of Scotland commissioned an independent review of ten bank branch closures undertaken by Johnston Carmichael. The outcome of that review was that RBS decided to keep the Barra branch open.

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