Banks on the high street 'to halve in number'
Study claims public's demand for 24-hour access will make retail branches obsolete
Access to bank branches on the high street is set to halve despite government demands for bank reform and more choice for consumers.
The Government has said it is committed to the creation of "challenger" banks – to compete with the "big five" of Barclays, Lloyds, HSBC, RBS and Santander – but, despite this, shocking research from global property expert Jones Lang LaSalle released today shows that up to 50 per cent of bank branches will close in the next eight years.
James Brown, head of European retail consulting at JLL, said: "The UK retail banking landscape is changing. New entrants are emerging, which is good for competition and consumer choice, but these operators will not want to absorb all the legacy property portfolios that the UK banks have amassed. As we have seen in retail, the new route to market is multi-channel, and the role of physical space in this mix is changing."
Challenger banks are supposed to give choice to the consumer and Virgin Money and Co-operative Bank, which is this week set to buy 630 branches from Lloyds, will certainly increase competition. New entrant Metro bank has 12 outlets and plans more.
But these new players will not increase the overall number of branches. Jones Lang LaSalle predicts that the increased focus on "multi-channel", 24-hour access to call centre staff through video conferencing, as well as the increase in online and mobile banking will mean fewer branches.
Banks and building societies have gradually reduced their outlets – just this month Nationwide confirmed it will close 23 branches.
Brown added: "Historically, a bank's sole channel was through a large branch network. While we are still seeing new entrants opening physical branches, our research highlights that most developed markets across America and Europe are 'over-banked'. We predict as a result of 'right-sizing' and embracing technology, 50 per cent of retail branches will be obsolete by 2020."
The only increase to physical access on the high street will come in the form of retailers such as Tesco, Asda and Marks & Spencer, who have been expanding into banking. But retailers will operate out of existing shops, not new or unwanted bank branches.
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