Banking on a revolution on the high street



Karen Chapman is partner at Druces LLP

Walking into the office this week, I was struck to see a buzz of people hurrying to work. They were getting off buses; emerging from Moorgate tube station and buying their early morning coffees from local shops. Not yet back to pre-pandemic levels of foot-fall in the City, but certainly moving in the right direction. And, of course, in the Square Mile, pandemic or no, there is still a bank on every corner. From branches of smaller international banks to the giants of UK high street banking, right on up to the Bank of England itself.

It is not quite the same for the rest of the country however.

Earlier in the summer there was a socially-distanced queue of people on Threadneedle Street waiting to get their hands on the new fifty-pound note, featuring Alan Turing. In truth, this enthusiasm for banknotes and physical cash is the exception rather than the rule these days; the recent lockdowns and the boom in online shopping and banking have accelerated the fall in the use of cash and access to bank branches, in much of what we do today. Even before the pandemic, the rate of closure of local bank branches – at around 50 a month for some years now – was a significant contributing factor in the much talked-about decline of the high street nationwide, where some of our clients still have their stores.

If you wander down your local high street today the chances are that many of the banks have closed, and Covid compounded the problem. When you add this to the fact that more than one in seven high street shops is now empty (according to data from the British Retail Consortium) this makes for a sorry sight.

Whilst this may be a generational phenomenon (or linked to socio-economic groups) customers often still need and want access to branches. Not everyone can cope with telephone or online banking – they may not even have access to a computer or Wi-Fi – and may prefer to hold face-to-face meetings, speaking directly to an actual person to transact their business. Millions of people still prefer or need to use cash for many aspects of their daily lives. And then, of course, there is the increase in online fraud…

So is there a solution?

Two surprising developments caught my eye lately and both may give clues as to the future direction of travel for our high streets.

First, not more than a 15-minute walk from the City in Shoreditch we find one of the newer ways of doing retail, in the form of “Boxpark” (https://www.boxpark.co.uk/). Built in 2011 as a temporary retail development, Boxpark stands on part of the old Bishopsgate goodsyard site, which is due for redevelopment in the not too distant future.

It makes use of shipping containers to provide small retail units to various cutting-edge stores. These are mainly businesses that do want a presence in Shoreditch but don’t want (or can’t afford) traditional bricks and mortar premises. Combining pop-up retail with dining and other entertainment options, the Boxpark formula has proved popular and has since been replicated in Croydon and Wembley.

So far, so Shoreditch. However, the latest business to move into one of these east London shipping containers is (not another hipster coffee shop but) none other than a pop up branch of Barclays Bank plc (https://events.uk.barclays/shoreditch). To quote Barclays, their team is: “here to help you with anything from managing your finances, to buying a home, or setting up and growing your business. We’ve swapped our counter service for comfy seating and our self-service devices for coffee machines.” A visit to a high street bank never used to involve comfy seating and coffee but it is good to see the big banks adapting and finding ways to be present in the new physical contexts in which people are doing their shopping these days.

The second example that interested me is a community banking experiment that has been written about by Claer Barrett in the FT Weekend recently. Rochford in Essex is a small town which, like many similar towns, has suffered from the closure of local bank branches. This has contributed to the general air of malaise that hangs over many small-town high streets in a state of decline. Happily for Rochford, it was chosen as the site of a new “bank hub” in which not one but five of the big banks have come together to share premises.

NatWest, Lloyds, Barclays, HSBC and Santander offer in person services on their designated day each week and the post office is also there in the mix. Local traders are celebrating the ease with which they can now carry out their business banking (cashing up no longer involves a journey to a branch in the next town some 20 miles away) and, more importantly, other retailers have noticed the upward effect on footfall as the presence of banking facilities has undoubtedly drawn people back to physical, traditional shopping.

This all seems to be an eminently sensible solution to me. As a lawyer, I am very used to seeing businesses take a floor (or part of a floor) in an office block, food outlets setting up shop right next door to each other in what feels like direct competition, and franchisees and concessionaires within bigger stores, so why not share a single floor of a high street shop?

Is this a model for what shared space could look like in our post-Covid world? If the Bank Hub is successful it will be interesting to see whether other retailers combine forces and, equally, whether landlords start to think differently and more creatively about their vacant space. With a bit of luck, this just might breathe new life into our high streets.

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