Local bank branches across the UK are closing at an exponential rate. Andrew Garvey argues this represents a great opportunity for accounting firms to grow by making their offices a local financial hub.
It would be easy to criticise high street banks for the unprecedented level of local branch closures. However, as I outlined in my previous article “How new bank technology will affect accountants”, consumer behaviour is changing dramatically. The stark reality is that it no longer makes commercial sense for banks to maintain extensive branch networks.
Banks don’t need branches
The general trend in retail banking is for consumers to use digital services – particularly mobile – to carry out most of their banking transactions. The decline of cash as a payment method also means that there is little need for a consumer to visit a branch to withdraw and deposit cash.
The branch is also less important as a distribution method for other products, such as credit cards, loans and insurance. Again, digital methods of distribution both online and via mobile are replacing branch visits as the way to apply for these products.
I’m also aware of many high street banks directing small business owners to open business current accounts via call centres. In short, bank branches are dying out and it is unlikely that many will remain outside of flagship branches located in major population centres.
The decline in branch numbers has also seen a correlated reduction in the number of local relationship managers for small businesses.
In a previous article, I wrote about the potential impact banking technology changes may have on accountants. But what about the societal impact of bank branch closures?
Some of the high street banks have set up “mini-hubs” in collaboration with each other. The main purpose of these hubs is cash handling. At Countingup we’ve partnered with the Post Office and PayPoint to handle cash at over 40,000 locations, so the added value of these hubs is fairly limited.
The effect on small business
The effect of the loss of a local financial hub can be seen more acutely in the following situations:
If a person looking to start a business can’t simply walk into a branch and set up a business current account easily, where will they go? They could easily set up a Countingup business account from their smartphone. However, there are people who want to discuss this process with somebody before committing to this.
If a small business owner who needs to raise finance cannot simply walk into a bank branch and speak to a relationship manager, what will they do? Again they can go online, search and apply, but they may well want some guidance on which option is the best fit for their business.
A role for accountants?
As I’ve previously suggested, the role of local banking adviser may well be thrust upon accountants by small business owners. If that is the case, why not embrace this and make your offices a local financial hub?
It would be possible to offer all of the services (apart from cash handling) that a bank branch would, together with a range of other services. For example, company incorporation. Countingup is currently testing a free company incorporation service with some of its accountant partners.
The technology and support exist for accountancy firms to open business current accounts, search and apply for financial products. This is potentially a great way to acquire new clients and also develop new revenue streams from existing ones.
It strikes me that it would be incredibly powerful for a new business owner if they could go to one place and leave with the following:
- Advice on business structure
- A newly formed company (if appropriate)
- A business current account
- Start-up capital
- All necessary insurances
- Accounting software set up
- A device for accepting card payment
- An accountant who can provide them with ongoing support
All of the above is absolutely possible right now. It wouldn’t take much of an investment to get this kind of offering set up. At this point, many businesses will also need advice on areas such as marketing, HR and legal. There’s an opportunity to deliver this advice either in-house or by partnering with other professionals.
It’s worth noting that the focus of this article is the accountancy firm as a local financial hub. It would seem to me though that there is no reason why this service couldn’t be delivered remotely if your catchment area is national.
We are currently working with accountancy firms who are interested in developing the above option. If this is a project you would be interested in exploring, you can find out more about our partner programme by clicking here and signing up for more information about our accountants' programme.
I am the Chief Commercial Officer at Countingup.com.
Prior to joining Countingup I started my career as a commercial solicitor and spent seven years in practice focusing mainly on banking and commercial property finance transactions. I then changed disciplines to run the Marketing function at a mid-sized law firm before moving on to ICAEW to work in Business Development. My first move in to the software industry was with FreeAgent in 2014 where I became Head of Practice Sales.
Having spoken to many thousands of accountants about a range of issues I appreciate just how challenging balancing providing an excellent service to clients whilst running a successful accountancy practice is. My role is of course to grow Countingup. However I have a lot of experience in how to market a professional services firm, training and professional development, sales and business development and of course software and technology. If anybody wants to have a chat about any of those please do get in touch.