Barclays protects 100 rural branches from closure – but there’s a catch

A bank freezing branch closures? It runs completely against the current narrative. But that indeed is what Barclays is doing with more than 100 of its “last in town” and/or remotely situated outlets, at least for the next two years.

Does this mean banking with hugs is becoming a reality?

Well, not quite. And there is a sting in the tail. This is, after all, banking we’re talking about. There’s always a catch.

But first let’s look at the good stuff.

Amid an ongoing furore about rural branch closures, Barclays decided to see what it could do to make them more viable at a time when more and more people are abandoning them in favour of the phone and the internet. It settled upon 12 of them to trial ideas, including changing opening hours to make them more customer friendly, reinstalling local managers and sending them out into the community, and using video facilities to add to the range of services they were able to offer.

The trials worked well enough for the plans to be extended.

The newly protected branches will still have to prove that they can be financially viable for the business. The bank makes it clear that people in the communities they serve will need to use them.

But it isn’t just waiting for business to come to it. It’s sending its staff out into the community in an attempt to whip up custom. I’m told the early results are encouraging.

If you make an effort you can win business. Who knew?

This is also, not to put too fine a point on it, smart PR. There are real concerns about the way rural communities are served by the industry’s giants at a time when challenger banks, which were supposed to provide the industry with a much-needed competitive jolt, are struggling.

If politicians and/or regulators start chuntering about competition investigations and such like, Barclays can point to what it’s doing and say, look see, we’re the good guys here.

At least up to a point. Because this brings us neatly to that sting in the tail I mentioned. Alongside the closure freeze, Barclays is opting out of part of an agreement it and its competitors have with the Post Office, which allows customers to use its outlets to deposit cash and withdraw money with their debit cards.

From 2020 onwards, Barclays’ customers won’t be able to do the latter.

The announcement dovetails with one from Which?, which this morning publishes another report raising concerns about access to cash in rural areas. The consumer group says that even some supposedly “protected” ATMs have been closing and highlights the long journeys some people now face to get their hands on their money.

Barclays says it’s going to replace the Post Office scheme with one of its own. It will involve local businesses offering a replacement service.

The trouble is, as Which? observes, its move does rather “blow apart industry claims that the Post Office network is a solution to the cash crisis”.

Which? wants the government to step in. At some point, probably when Boris Johnson has departed and something resembling a sensible administration has emerged, that may ultimately happen. The provision of banking services and access to cash in remote areas clearly warrants better oversight than it’s currently getting.

Barclays would be wise to rethink this part of its decision. Protecting 100 of its branches from closure is both smart and commendable, but the Post Office pull-out risks snatching defeat from the jaws of victory.