Meeting minimum banking requirements – what banks need to consider

What factors must banks think about if they are to deliver an effective level of service to all customers, including those in rural and hard-to-reach areas?

Being able to effectively deliver banking services to inaccessible or remote locations has long been a concern for both the industry and customers. But in an era where the traditional branch is under intense pressure to operate efficiently and cost-effectively in a more digitally-focused environment, this becomes more important than ever.

The alternative for banks that are unable to achieve this successfully is closing unprofitable branches, but this is never a popular decision, and it’s one that always comes with the risk of negative publicity and reduced customer experience. Therefore, what can banks do to ensure that they can continue to provide services to rural and hard-to-reach communities at all times?

The call for minimum banking requirements

One area where the issue of branch closures has been in the news recently is Scotland, and this has led some figures in the government to call for changes in the law to ensure consumers are not left without access to banking solutions.

It was reported┬álate last year that Scotland’s business minister Paul Wheelhouse has urged the UK government to set out a series of standards defining ‘minimum banking requirements’. He observed that without these, some of the country’s remotest communities will be left badly affected, with the worst impacts being felt by the most vulnerable customers.

Mr Wheelhouse stated: “I call on the UK government to establish and enforce a guaranteed minimum level of service provision for essential banking services, recognizing the importance of continued access to banking for communities across Scotland, and across the UK.”

While the minister’s calls for government action are unlikely to go anywhere, with a spokesman for the UK Treasury emphasizing that it will not intervene in banks’ commercial decisions, it does raise the question of what essential services banks should be looking to provide and how they can ensure they are delivering such services in every location.

Taking advantage of technology

Fortunately, today’s banking technology means that even if financial services providers determine it will not be cost-effective to open or maintain a full branch in a particular location, this does not mean that essential services have to disappear or are taken further away from the consumers that need them.

For instance, many banks around the world now deploy ‘microbranch’ alternatives that can provide all these facilities within a much smaller footprint thanks to advanced self-service devices.

While these can ensure that essential basic services such as deposits and withdrawals can be conducted easily, they offer much more than this. For example, for many people, their definition of a minimum level of service will include being able to speak face-to-face with a knowledgeable adviser – and this is something that can be achieved with the latest self-service solutions through video calling technology.

Such functionality may be particularly important in rural and inaccessible locations where it may otherwise require a long journey in order to discuss more complex and sensitive banking matters with an expert. At a time when many banks are focusing their efforts on digital interactions, being able to maintain a friendly face even where a full branch would be impractical should not be overlooked as part of the delivering the minimum level of service customers expect.

 

Written by Jack Dougal

Jack Dougal

Jack Dougal is Banking.com's resident news reporter. He writes regular blogs covering the latest stories and key developments in the global financial services industry.

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