Research from consumer group Which? shows that banks and building societies have closed a total of 3,312 branches in the period between January 2015 and August 2019 with an average of 55 closing across the country each month – that’s over a third of the total number that existed prior to the closure programs being instigated. Meanwhile, the report goes onto say that a further 100 branches are scheduled to close before the end of the year.
The two largest culprits for closures, coincidentally are the two organisations that benefited from the bulk of the tax payer bail outs that were seen during the last financial crisis. The RBS Group, which comprises of NatWest, Royal Bank of Scotland and Ulster Bank, has closed 1,094 branches during the period whilst Lloyds Banking Group, made up of Lloyds Bank, Halifax and Bank of Scotland, shut down some 569 sites.
The report goes onto say that closures reached their peak in 2017, when 868 sites were lost around the UK, at a rate of more than 70 a month. Similarly, some 794 branches closed in 2018. In the first seven months of 2019, the rate has slowed, with 325 branches closed. This puts the current year on a similar footing to 2015 and 2016, when between 600 and 700 branches were lost. Between January 2018 and August of this year, RBS closed the most branches (277) closely followed by Barclays (243) and NatWest (197).
Looking at the reasons for the closure the report concludes that the way we bank has changed dramatically over the past few years, with use of online and mobile banking rising and fewer people visiting branches. According to a report published by UK Finance, the trade body that represents banks, 71% of adults used online banking in 2017, representing 38 million people. Close to 22 million people used mobile banking apps, and there were around 5.5bn logins to apps last year. Meanwhile, the average branch received 104 visits a day in 2017, compared to 140 per day in 2012. This represents a 26% fall in bank branch visits.
Banks and building societies say that this has been the main driver of closures. Customers’ banking habits are changing, and branches are needed by fewer and fewer customers. However, there are still plenty of people and small businesses that rely on local banks, who either don’t want to or cannot engage with the digital revolution. This is particularly challenging in rural areas, where people suffer with poor broadband and mobile coverage, and higher populations of elderly customers.
There are other reasons for branch closures. RBS Group took the decision to close hundreds of Royal Bank of Scotland branches in England and Wales because it now allows customers of that brand to bank in a local NatWest branch. This meant it was running two branches in a high street when there was only a need for one. Yorkshire Building Society merged with Barnsley, Chelsea and Norwich & Peterborough building societies between 2008 and 2011. The mergers resulted in multiple high street locations within the same town again leading to closures.
What can you do?
According to UK Finance, 99% of retail banking customers can carry out basic banking at one of 11,547 Post Offices across the UK. Post Office banking services are limited to activities such as withdrawing cash from your current account, checking your balance and paying in cash and cheques.