The village that put its money where its mouth was

When the last bank pulled out of Horbury, in Yorkshire, the residents took action. By Simon Read

When the Halifax shut its doors in the West Yorkshire village of Horbury last July, some 10,000 local residents were left without a nearby bank branch. The move caused anger among locals, especially businesses, who were forced to travel to Wakefield or Ossett, around three miles away, to visit their nearest branch.

It's a tale that's been repeated across the country as the high-street banks have slashed costs and reduced their networks by almost half in the past two decades. The widescale withdrawal has left almost 1,000 local communities with no banking services at all.

But in the case of Horbury the story is set to have a happy ending after local residents battled to have a bank brought back to the town. More than 1,000 of them, one in 10 of the residents, signed a petition asking the Co-operative, which has a largish food store in the high street, if it could provide essential banking services.

After such a massive community campaign, the Co-op agreed and a bank branch is returning to the village next month. The strength of feeling in Horbury is such that a meeting held last week to introduce new bank branch manager Karen Rayner attracted more than 100 people.

"Getting a bank back in Horbury is really good for the town," says Ray Tindale, one of the Horbury pensioners hit by the banks' departure who signed the petition. "Most banks are making savings by getting rid of banks in small communities like ours, and the Co-op is filling this gap. Customers still want a local, friendly face that they can have a conversation with – they want a personal service. It will also help investment in Horbury, as if people withdraw money here they're more likely to spend it in the town."

Banks close branches for a variety of reasons. The high number of mergers and takeovers of former building societies is one reason, and accounts for a high proportion of the massive 7,388 branches closed in the past 20 years. But banks have also been quick to close branches if they become "uneconomic", short-hand for "not making enough money". However, such closures can be short-sighted as disaffected customers simply take their accounts elsewhere.

The Co-operative Bank clearly hopes its move into Hornbury will help it pick up new customers. Although it already has a presence in the village through its supermarket, there's an element of giving loyal customers what they want. Rod Bulmer, managing director of retail at Co-operative Financial Services says the mutual is keen to open more branches like Hornbury. "While other major banks are being forced to close branches and communities are being left without banking facilities, we're in the fortunate position of being able to open new ones," he explains.

The Co-op is currently a year into a programme of new in-store branches. Its plan is to increase its current branch network of 330, which includes Britannia branches, to 500. Five in-store branches are already up and running at Hove and Peacehaven in Sussex, Matlock in Derbyshire, Wickford in Essex and Marple in Cheshire. On Thursday this week the sixth opened at Holmfirth in West Yorkshire with Hornbury set to be the seventh.

The beauty of the Co-op's move is that it already has a presence in these areas through its 3,000 supermarkets so it doesn't have the huge costs associated with finding and fitting out suitable premises. It's more a question of identifying where there's a need – and the space – for a branch. However, that doesn't mean the new in-store branches are simply crammed into a corner by the meat counter; far from it. They offer full branch banking facilities with Hornbury, for instance, having four staff under manager Karen Rayner and remaining open six days a week.

"We're looking at an ambitious expansion of in-store banks to grow our high street presence and give customers a compelling alternative to the Big five banks," says Rod Bulmer. "We're committed to providing personal banking in the most convenient way to customers and to expand the availability of our services across the UK."

That's good news for the hundreds of thousands of people currently without a bank branch within walking distance. With Tesco set to ramp up its banking services soon, and the Post Office's People's Bank in the offing, credible alternatives to the traditional banks are finally beginning to emerge.