Guest blog by Dani McNabb, Product Marketing Manager at Sopra Banking Software

Banks and building societies are facing unprecedented challenges when approaching the careful balancing act of getting branches in locations they are most needed. According to a January 2023 YouGov survey only 2% of Brits reported visiting their bank branch once a week compared to the 35% who said they visit their branch ‘hardly ever, if at all’.. The rise in the number of people reporting to visit their branch hardly ever, if at all rose sharply from 27% in January 2020 to 36% in January 2021[1] indicating that more and more consumers began to manage their account online or through other channels as the COVID 19 pandemic progressed.

With such a decline in usage, it is understandable why branches have been slowly disappearing from our high streets. Rising operational costs, the decline in cash usage, and a reduction in town foot fall have been contributing factors to closures over the years. Another consideration for the decline in branch usage is the rise of mobile and digital banking, which went from around 52% of survey respondents in 2012 to 93% in 2022 according to a Statista report. [2]

However, mobile and digital banking poses an issue for customers in rural areas with poor broadband signal, limited mobile coverage, and in communities with a higher population of elderly customers. Customers may find themselves in a position where they want and try to adapt to a more futuristic way of banking, but despite their best efforts, may not always be able to do so. There has been an increase in communities crying out for locations to deposit and withdraw cash as branches have disappeared as well as provide assistance for vulnerable people and others in need of face-to-face support. According to Bank of England reports, the UK has around 5 million people who are dependent on cash with nearly £82billion in circulation today,[3] double the amount it was 10 years ago.

During the 2022 Queen’s speech, the government pledged to bring forward a Financial Services and Markets Bill, which aims to make sure people in the UK can access their case with ease. To support this, the Financial Conduct Authority (FCA) will be given additional powers that will allow them to address cash issues both at a national and local level with banks and building societies. Due to the nature of the banking market, separate rules will apply in Northern Ireland. The government is due to lay out expectations for a reasonable distance for people to travel when depositing and withdrawing cash in the near future.

What this means is that banks and building societies are faced with a new challenge to identify alternative solutions to support customers in need of a physical branch location. Some solutions already supporting customers’ needs include use of post office branches for deposits and payments, community branches where bank staff travel to communities to discussion financial issues and help people find alternative ways to bank, and tech support offered through banks and building societies to empower customers with confidence in using mobile banking. An example of a building society that have utilised the community branch network is Newcastle Building Society, who offer members a range of face-to-face support channels including 31 branches, 14 community rooms, and 4 community partnership branches. [4]

While these solutions are a good stop gap, there are certain services that cannot be supported via these channels and there are risks due to the lack of control over the environment, including to their brand recognition and company values. An alternative solution that emerged within the last decade that providers customers with an in-branch experience and offering personalised support to communities in need is through the use of ‘pop-up banking’.

Pop-up banking is a relatively new concept in the UK that involves setting up a temporary (or ‘pop-up’) bank or building society branch. Typically, these pop-up branches are housed in a van or mobile unit, and they are designed to reach customers in areas where it may not be cost-effective to have a permanent branch. These temporary branch locations differ from banking hubs, which have also been on the rise in recent years, which offer a shared service run by Post Office staff where customers of almost any bank can complete transactions typically performed in branch. These mobile branch units are controlled and staffed by the financial organisation ensuring brand identity is maintained and connects the organisation directly to their customers or members, enabling them to offer in-person client support. Along with servicing customers, the use of pop-up branches allows financial institutions to gather customer data on the uptake in underbanked areas before committing to opening a permanent branch. The usage of pop-up branches may indicate to banks and building societies if there is a rising need for a branch in a certain area, which may have changed since they closed a nearby location. This change could be for a number of reasons including closures of local post offices, business growth in an area, or need for more face-to-face support required by vulnerable customers.

While still in its relative infancy, there have been indications over last 10 years that pop-up branches are on the rise. A report published back in 2018 by the British Bankers' Association found that the number of mobile banking units in the UK had grown from just a handful in 2013 to more than 200 in 2018. Since then, a number of well-known, large banks and building societies have conducted several successful pilots around the country and have invested in a fleet of pop-up branches. 

With the demand on bank and building society branches ever evolving, expanding your offer to clients will ensure both customer satisfaction and retention. It is also a good opportunity to make customers aware of other products and services available as well as educate customers and members on the benefits they will experience using mobile banking more frequently.

There are several benefits banks and building societies can experience by implementing a pop-up branch network with SBS including simplification of processes, re-use of existing licenses, removal of windows licensing, easier upgrades (don’t have to upgrade individual branches), centralised infrastructure, improved data modelling, maintaining brand identity, flexibility in location and future development include supporting cash handling, banking hubs, and self-service style checkouts.

While pop-up branches may not provide the same level of service as a permanent branch, they have become a popular alternative to providing cost effective banking services to more rural communities within the UK. Implementing a pop-up branch into your wider system architecture doesn’t need to be a complicated process.

Contact Sopra Banking Software and speak with one of our experts if you are interested in learning more about pop-up branches.