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Banking excluding the rural

Categories : Cash is a public good, Cash is trust
March 23, 2017
Tags : ATM, ATMs, Commercial bank, Europe, Financial inclusion, United Kingdom, US
Rural towns in the US and in the UK are increasingly being left without access to banking services and cash machines. Thankfully, residents are organising to seek alternative solutions.
Communication Team / Equipo de Comunicación

Financial institutions are progressively closing local branches in order to focus on online and mobile banking and reduce costs. Nevertheless, the closure of banks in small towns and rural regions has a significant impact on their residents, which are sometimes left without any access to cash or banking services.

In the United Kingdom, the number of bank branches dropped 53% since 1989. For instance, the small town of Blaenau Ffestiniog lost its last bank in September 2016 and, with it, one of two remaining ATMs. This cash shortage had consequences not only for the 5,000 local inhabitants but also for tourism. Local authorities took action and a new 24-hour ATM provided by Cardtronics UK was finally installed last February. A similar scenario can be seen in the United States where 1,600 branches disappeared in 2016.

Officials of such small communities fear the impact that a closure may have on the local economy as small business loans tend to fall significantly when no banks are left, as demonstrated by a study led by the MIT. The closure of a bank branch thus often brings the fatal blow to regions already struggling financially.

Some financial institutions have proposed alternatives and replaced their branches with self-service ATMs and virtual assistance allowing customers to talk with specialists remotely. In North Carolina, for example, a bank offered classes on online and mobile banking to its customers to offset the impact of a branch removal. Tim Halford, Cardtronics Managing Director, assumes that the consequences of a closure are sometimes not well understood. Banks should at least make ATMs available to offer consumers access to their money.

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