Nationwide pledges to keep High Street branches open amid the rise of online banking. Will this be a pivotal moment for the banking industry? A Commercial Awareness Analysis: Online banking and law.

Nationwide has pledged to keep all 696 of its branches open until 2030, an extension of its previous promise by 2 years. The building society is the last standing branch in 133 towns in the UK. The said strategic aim for this action is to win a greater customer base from the many rival banks that are closing down their branches- either to cut costs or switch to follow the trend of online banking (e.g. Lloyds, Halifax, NatWest). Additionally, Nationwide has seen overall increases year-on year to September in the number of current accounts created(29%), frequency of cashpoint usage (11%) and the amount of customers using their high street branches.

From a commercial perspective this raises many questions: What's next for Nationwide? How might Nationwide's actions impact the banking industry? What disputes may arise and which legal clients will be affected? And how may lawyers responds to such issues?

To gain a better understanding of the situation it is important to understand Nationwide's business model. Nationwide is the UK's largest building society- not your regular bank. In other words, whilst traditional banks like Barclays pay dividends to shareholders, Nationwide is seen as member-owned and employs the 'Fairer Share' scheme, distributing its surplus of profits. It primarily makes a profit from distributing loans to its customers at higher interest rates than it pays on savings.

In taking the bold stance of pledging to keep its high street branches open, Nationwide is differentiating itself from rival banks. From a financial perspective, Nationwide may face higher short term costs than rival banks (e.g. maintenance costs, paying employees). However, the drawbacks may be outweighed in the long run. For instance, the differentiated approach may attract more customers, especially older customers that may require more assistance with technology. In doing so, Nationwide may see a surge in customer loyalty and may potentially see a rise in its cashpoint usage, current account openings and reputation, making the Nationwide the winner of the banking industry.

But what about other banking competitors? Do they also benefit from Nationwide's move? Most likely not. The cost-cutting tactic resulting from high branch operating costs is a benefit to each bank in the short-run. But with many banks switching to online banking, it may become harder for each to differentiate from one another in the long -run where one could say we are heading to a cashless society. This significantly impacts the entire banking industry due to enhanced digital competition and most importantly: higher levels of regulation.

With the FCA's (Financial Conduct Authority) implemented rules for access to cash, namely the requirement for banks and building societies to protect customers' ability to withdraw and deposit cash), we could see a rise in digital regulation by the FCA. Possibly, Nationwide is in a stronger regulatory position: Keeping branches open means more face to face services along with cashpoints and this aligns perfectly with the FCA's ideas of inclusivity and consumer protection- unlike rivals that may face scrutiny over less cashpoint availability and less assistance for older customers.

So how exactly does this impact the legal world? Following from the chances of increased regulation and digital competition, law firms may have to advise their bank clients on compliance with FCA rules along with consumer protection considering the negative impact the elderly may incur based on the switch to online banking. This may raise client complaints in which lawyers will have to advise banks and building societies on equal access disputes. More importantly with the rise in digital use it is necessary that solicitors advise on data and privacy matters, which if not handled properly, could result in detrimental outcomes.

It is worth noting that bank companies are not the only legal clients that will be impacted by the shift to online banking. Commercial and real estate landlords may face negative impacts in regards to losing their customers, thus impacting their profits. Banking hub operators will be essential to the access to cash requirements, increasing the presence of the role. Tech vendors will thrive in their larger client base and inflows of profits. Thus, lawyers must be prepared to assist a wide range of different clients.

Now that we have understood the significant commercial and legal reforms that may take place, we can consider how law firms will move forward. It seems integral that law firms build on their expertise in areas of financial regulation and consumer protection laws as well as equal accessibility. This could range from creating evidence trails that banks have aligned with FCA regulations to creating robust impact assessment frameworks.

To conclude this analysis, Nationwide has undertaken a powerful position in pledging to maintain its physical presence amid rival bank branch shutdowns. The current banking sector appears to be moving towards a cashless and online system but this will raise tight disputes on equal access and compliance in response to FCA regulations. And finally, lawyers will have to prepare for the gradual shift, advising clients ranging from the bank itself to commercial and real estate landlords.