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HSBC Holdings PLC (LSE:HSBA) has announced that it will maintain its branch network intact until at least 2026. This pledge comes in response to increasing pressure from regulators and politicians focused on ensuring continued access to cash and in-person banking services. The bank plans to communicate to its approximately 15 million UK customers this week that it will not reduce its current total of 327 branches. Additionally, HSBC has allocated £50 million this year for updating and refurbishing its branches to enhance their functionality and customer experience.
Impact of Branch Closures
Since 2015, UK banks have closed over 6,000 branches, according to a consumer group, HSBC itself has closed 743 branches during this period, with 114 closures occurring in 2023. The closures reflect a broader trend of reducing operational costs and adapting to the growing shift towards online banking.
Challenges for Customers Without Local Branches
Which? has reported that by the end of this year, nearly three million people will reside in parliamentary constituencies without a local bank branch. This situation has raised concerns among campaigners who highlight that around five million people, including the elderly and those with limited internet access, prefer in-person banking and may face disadvantages due to branch closures.
Access to cash has become a focal point for major political parties. The government recently enhanced the Financial Conduct Authority’s (FCA) powers through the Financial Services and Markets Act to ensure continued availability of physical money. Starting from 18 September, banks and building societies will need to evaluate whether the closure of local branches or ATMs leaves communities without sufficient access to cash before making such decisions.
Requirements for Adequate Cash Services
Under the new FCA rules, if significant gaps in cash access are identified, banks will be required to offer "reasonable additional cash services." These services may include banking hubs, ATMs, and Post Office facilities. Failure to comply with these regulations could result in unlimited fines for non-compliant lenders.
Christopher Dean, HSBC’s head of UK customer channels, emphasized the importance of the bank’s 327 branches in serving its customers. This commitment underscores HSBC’s recognition of the role its branches play in providing essential services.
Developments in Banking Hubs
Labour has committed to establishing 350 banking hubs across Britain over the next five years as part of a broader initiative to revitalize high streets. Currently, there are 68 banking hubs in operation, which allow customers of various banks to access in-person services and perform transactions such as cash deposits and withdrawals. These hubs are managed by the Post Office in collaboration with nine major high street banks, including HSBC.
HSBC’s decision to halt further branch closures and invest in its existing network reflects a response to regulatory and public concerns about access to banking services. As new rules come into effect, banks will need to ensure that their decisions do not negatively impact communities' access to essential cash services. The expansion of banking hubs further supports efforts to maintain accessible in-person banking options.
