A million people in the UK could lose easy access to a bank branch in their local area, as banks continue to shutter their high street operations in favour of digital investments.
Research by analytics software company SAS compared the number of branches in 2020 and 2023 in UK constituencies, areas represented by an MP. The study found that 80 localities have lost 80% of their bank branches over the past three years, and the average UK constituency has lost over half its bank branches in the past three years.
SAS said that at current closure rates, rural places like Ross and Skye in Scotland and Central Devon and Gainsborough in England could have no in-person branches in just a couple of months’ time.
Even some urban constituencies, including Leeds East, Gateshead, Cardiff West and Bristol South, are at risk of being without an in-person branch in the next year.
Louise Potts, head of banking and customer advisory at SAS UK, said online banking has revolutionised personal finance, making it easier for customers to carry out day-to-day transactions whatever their location.
But she warned that online banking is not always a viable option for everyone. “In-person banking services provide crucial services if you’re struggling to access the internet or find a solution online.”
According to recent figures from consumer rights champion Which?, banks and building societies have closed or scheduled the closure of over 5,500 branches since January 2015. Closures reached their peak in 2017, when 867 sites in the UK were shuttered. In 2019, 444 branches shut their doors for good, while 2020 saw 369 cut from branch networks, as several banks shelved plans due to the pandemic. In 2021, a total of 735 were closed, followed by 662 last year.
Consumers are increasingly using mobile apps and websites to complete their everyday banking, and banks are responding with huge investments in technology.
The migration to digital banking was accelerated during the Covid-19 pandemic, when branches were forced to close due to lockdown restrictions and people lessened their use of cash in a bid to avoid physical contact with other people and possessions. This change resulted in many people choosing to continue using digital services even once restrictions were lifted.
Banks are looking at ways to assuage people’s fears of losing access to physical banking services through tech-driven pilots of mobile physical services.
In January, Barclays launched a project to create “banking pods” where banking services can be accessed. The bank describes the banking pods as “purpose-built, semi-permanent structures in sites such as shopping centres and retail parks”. It said at least 10 would be set up in the UK by this summer. To reach customers in remote locations, it also plans for six more electric vehicle banking vans to be added to its existing fleet of 10.
Last month, TSB said it was piloting its own banking pods, which will offer banking services in shopping centres and provide an alternative source of banking services as more bank branches close.
“Banking hubs have become a new alternative for those who don’t have access to a traditional branch,” said Potts at SAS. “Ultimately, everyone needs access to banking. Our research highlights the areas that may need support, whether it be technological advancements to improve internet access, or consideration for the opening of a new banking hub.”