Post Office Banking: The Advantages and Disadvantages
With 53% of UK bank branches closing between 1989 and 2016, some banking customers have started seeking alternatives to traditional banking – from managing finances exclusively online to saving their money at home.
A report from the Lords Financial Exclusion Committee last week claimed that around 1.7 million people do not have a bank account, and blamed the financial industry for doing little to open up financial channels for everyone. At the same time, it suggested a public awareness campaign was required to highlight post offices as a possible substitute for banking.
Anthony Browne, CEO of the British Bankers’ Association, welcomes the role Post Offices have to play in our everyday financial transactions, saying:
‘Nine out of 10 people now live within 20 minutes’ walk from a bank or a Post Office where they are able to do banking face-to-face with another person. Banking is changing hugely, with people now able to speak to their banks at any time of the day or night on the phone or check their balance on an app. But this isn’t for everyone, as some people still want that personal contact, which is why this arrangement with the Post Office is such good news. It ensures customers can continue to access face-to-face banking and that no one gets left behind by the technological revolution sweeping the industry.’
So, is Post Office banking right for you? There are definite pros and cons to choosing to replace your local bank with your local Post Office…
Anyone can bank there
In 2015, the Government forced major high street banks sign a pact that allowed their customers to do their banking at the Post Office. It’s all part of a continuing drive to put the Post Office at the heart of communities across the country at a time when threats of closure hang over the heads of both bank branches and Post Offices.
It’s not just personal customers either; the banking service is also available to small businesses with fewer than 50 staff. So, even if you’re not sure you want to take out a Post Office account – or you’re entirely happy with your current bank – that won’t stop you from using the Post Office as a banking base, where you can access and manage your account, and make deposits and withdrawals free of charge.
There are some things you can’t do
Despite the many services offered, many of these are considered basic banking. If you’re looking for more complex services, they may not be right for you. Currently, Post Offices serve 99% of the needs of current account users, and 75% of small business needs. Fairly comprehensive, then, for personal customers, but still lacking in measures to include small businesses. It’s worth noting that the level of support for business owners has been improving – prior to 2017, small businesses had access to just 40% of services.
Another factor to consider is whether you’re comfortable actually using a Post Office to bank; many people prefer deal directly with banks for large financial transactions, or more traditional banking services such as mortgages and larger loans. Sure, the Post Office offers services like mortgages, provided by Bank of Ireland, but it’s still finding it hard to shake off the image of stamps and passport photos.
There are more of them than banks
If you live in a rural area, or towns where branch closures are a very real threat, it’s worth remembering this: There are more physical Post Offices than bank branches.
Many believe that this is, in part, because banks can now offload core personal banking services to the Post Office, leaving them to axe local branches. In January, alone, HSBC shuttered a further 62 sites, saying, ‘We now feel we have the right branch network that complements the other ways in which customers now choose to interact with us.’ Which loosely translates as letting Post Offices shoulder the burden. Not that the Post Offices mind – indeed, it helps ensure their survival, with them stating that:
‘By making sure alternative counter-based banking services are accessible through the Post Office, the impact of local branch closures on communities can be minimised. The Post Office plays an important part in financial inclusion. It is the most accessible place for handling financial transactions, particularly in remote areas – ensuring customers have the opportunity to access cash and basic banking services whenever and wherever they need, providing a vital stimulus for local businesses.’
At present, around 11,600 Post Office branches now offer banking services, making it an especially convenient choice, particularly when you find your options are limited.
The Postal renaissance may not last
While all seems well for a re-energised Post Office looking to tackle big banks, while staving off their own closures (or relocating inside your local WH Smith), this might not be permanent. A report from consultants Accenture has shown that 18 to 21-year-olds visit their bank more than other demographic – and convincing them to choose the Post Office instead may be a hard habit to break.
On top of that, online banking is growing in popularity – it’s another reason why banks feel they can close branches without taking a hit. It’s now far more secure and convenient, and although some still prefer face-to-face banking over the counter, as the country’s internet infrastructure continues to develop, more and more people may see this as the real banking substitute. And, unfortunately, that might be enough to end the Post Office’s banking land-grab.
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