By Mark Fairlie

This week, The Financial Conduct Authority (FCA) released the latest analysis from its Financial Lives survey; turning the spotlight onto the real financial situation experienced by Brits today.

The financial regulator interviewed more than 13,000 people across the UK in the largest tracking survey of its kind, finding a clear divide between those living in the countryside and those in urban areas of the country when it comes to finances.

Andrew Bailey, FCA Chief Executive, has said the survey

“shows just how different the experience of financial services is for consumers across the country. That’s important for us, as we shape financial services policy. But it is also important for firms, as they decide how best to serve their customers.”

The urban-rural divide overall

The FCA revealed that people living in urban areas of the country have bigger non-mortgage debts on average, and are more likely to rely on high-cost loans. The average unsecured debt is 3,600 in urban areas, compared with £2,510 in rural locations.

Where 5% of adults living in rural areas currently have high-cost loans, this rises to 7% in British cities. 7% more adults in urban than rural areas have been overdrawn in the last 12 months, and 6% more urban citizens have a credit card on which they do not pay off the balance every month.

The findings did, however, show that over half of retired people in rural areas relied solely or mainly on their State Pension, where only 37% of retirees in urban areas do so.

Despite this, the researchers discovered that those in rural areas were much more satisfied with their overall financial circumstances than those in urban towns. 27% of rural citizens said they were “highly satisfied” with their finances, compared with just 20% of city dwellers.

Rural communities less likely to use mobile banking

The urban-rural divide in Britain revealed

One of the most notable findings from the FCA report was that people and businesses in the UK are far less likely to access internet banking compared with their urban counterparts.

An older generation and unreliable mobile and broadband coverage were cited as the most common reason just 23% of those in the country use mobile banking, and just 54% use internet banking. Compared with the respective 45% and 78% in urban cities, the findings are expected to reignite the debate over bank branch closures in many areas across the UK.

It was also revealed that people living in rural areas tend to be older than those in urban areas and that they are more likely to be retired, which could also go to explain the slow take-up of online and mobile banking.

The FCA has said that access to financial services was a particularly large problem in rural Britain. Further exacerbated by the fact that 70% of the population that never use the internet live in these rural areas, many are now concerned that no access to a physical bank could leave them with no way of accessing their vital financial services.

The bank closure debate

Banking trade body UK Finance recently revealed that the use of mobile banking apps are on the rise, with more than 5.5 billion customers logging on in 2017. This has raised the question as to whether physical bank stores are becoming obsolete.

Earlier this month, Which? reported UK bank branches closing at an “alarming rate” – with around 60 closures a month on average. So far this year, more than 670 branches have been closed down, meaning 2018 is already on course to overtake the total 879 closures in 2017.

But along with the data from the FCA survey, it is clear that these closures could leave millions of people in rural areas struggling to access the financial services they need.

The study also revealed that a higher proportion of adults aged 55 and over, or that are younger and have a long-term health condition, have difficulty getting to their bank. With fewer physical branches available to them – and if these customers are part of the large rural population not using online banking – they could find it even harder to access their financial services.

The FCA’s main report, published last year, suggested that as many as 25.6 million consumers could be vulnerable to financial harm over the next few years.

Is this the end of physical bank branches?

Research conducted by IT solutions firm Fujitsu found that business leaders and the general public alike believe that bank tellers were the most likely job to not exist in ten years’ time; followed by shop assistants and shelf-stackers.

As cash use becomes less commonplace in the UK and more customers switch to online banking methods, it would seem this may be the case. But as the FCA findings have shown, there are many that still rely on traditional, physical bank branches to manage their finances – and closing them entirely could leave many in rural towns with very few options.

A spokesman for banking trade body UK Finance told the BBC that

“looking after every customer, especially those in vulnerable circumstances, is a priority for the financial services sector.”

“We will read the findings of the FCA’s report with interest and look forward to working closely with the regulator to support customers”.