Atom Bank is the latest digital bank to propose Post Office branches as places where customers can pay in cash and make other transactions.
In the same way that consumers can withdraw cash at any ATM, a banking service at the Post Office could be offered to customers of any bank.
In an interview with City AM, Atom CEO Mark Mullen said while cheques can be paid into a bank account via a smartphone by taking a picture of it, this is not the case for cash or a number of other face-to-face services.
Atom Bank is one of a new breed of banks using technology as a differentiator.
Mullen said the Carphone Warehouse model, where the store offers contracts for all mobile providers, could be applied to banking, with the Post Office filling that role.
“Why would we spend money on branches up and down the country when they all do the same thing? The big banks’ fallback position is, don’t be the last branch to close in any town, and if you are, tell people to use the Post Office. They’re already saying use a common utility,” he said.
Business secretary Vince Cable recently said the 11,500 Post Office branches could be used as an alternative location for banking services, and payment provider Advanced Payment Solutions (APS) has already signed an agreement to allow its customers to access banking services in Post Office branches.
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This follows a major IT project between the two organisations. Business and consumer users of APS’s digital current account service, Cashplus, can withdraw cash in real time and make instant balance enquiries at Post Office counters. APS also provides lending and prepaid credit cards.
Atom will be digital only and plans an online-only current account. Founder Anthony Thomson said the low operating costs at the bank may result in financial benefits for its customers. These might include lower interest rates on loans and higher rates on savings.
The bank’s website reads: “We think customers want value for money, with service at the touch of a button. A bank that’s fair and transparent, that acts in the best interest of its customers. One that really doesn’t act like a bank at all.
“And we’re digital, because we believe technology makes life easier and puts you in control. It can even bring people closer together.”
The Post Office is already being seen by the traditional banks as an alternative to branches. Banks are cutting costs and see their large branch networks as an easy target for cuts. Hundreds of branches in remote locations are planned to close this year on top of hundreds already gone. The government is eager for an alternative should the last branch in town close.
The Royal Bank of Scotland (RBS) and the Co-operative Bank provide recent examples of companies announcing branch closures.
The Co-operative Bank is closing about a quarter of its remaining branches, replacing them with digital technology. It will close 57 branches as part of its cost-cutting plans, leaving it with 165 (about one per 8,500 customers), but aims to retain service levels through IT. The bank said it was responding to changes in the way customers bank.
Meanwhile, RBS will close another 99 branches.
TSB is one high street bank countering the industry trend, however, opening 30 new branches and refurbishing 265 existing ones.
TSB is not alone in valuing its branch network. NatWest said its branches in Shoreditch and Moorgate were being refurbished to serve customers better and if the east London branch refits are successful, they will be mirrored in 300 other branches.