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TSB and the new world order

As TSB prepares to be taken over by Banco Sabadell, their focus on physical branches is a notable move. In the face of increasing tendencies toward digital services, the purchase of 30 new outlets to add to a network of 265 flies in the face of many other high street banks' strategies.


TSB has had a chequered history. Having been absorbed into the Lloyd's network in 1995, it was wiped from the high street in an era when digital banking was just a pipe dream. 20 years later, with a government bail-out and a return to profit under the Lloyds TSB banner in 2013, it has been sold to Spain's Banco Sabadell at a loss to Lloyds of over £660m.

The old model

The focus on physical branches may indicate a decision to remain a "local bank" in the old model, when one knew one's bank manager and perhaps experienced a more personal service. Regulation, trends towards customer service efficiency and changing public attitudes to banks have altered retail customers' requirements, but in the UK at least TSB are not alone in focussing on "Local Banking on Demand", as Peter Navin, Managing Director for Branch and Business Banking, says. NatWest have also spend significant resources focussing on their expanded opening hours and abolition of 'new customer only' offers, in an attempt to improve loyalty and attract new business from retail customers who find traditional 'banking hours' and policies impossible to work with.


The retail banking space in the UK has been disrupted by the Metrobank model in recent years - whose approach includes seven day opening and simple account opening services. They are also pet-friendly.

The assessment of what a high street customer wants from their bank has been the focus of much discussion in the post-GFC world. Scandals, reputational disgrace and bail-outs have required banks to abandon the stalwart and haughty attitude they had in the 'golden era' of high street banking between the 1970s and 1990s.

TSB may appear bold, but it's hedging its bets. In addition to the expansion of physical branches, they are doubling their digital team, and claim to be the "first UK bank to appoint a chief digital officer to the executive team" according to Finextra.

What customers want

If TSB can meet customer needs in physical branches, there is much to be gained for their new owners. The latest World Retail Banking Report from Capgemini and Efma lists several negative trends for retail banks:

  • Globally, likelihood of changing primary bank is increasing.
    • Customers are less likely to make a referral.
  • Digital service alternatives are not satisfying customers.
  • Innovative and disruptive players including Apple and Google are piquing customer interest.
  • Complex integrations to create personalised service are increasingly straining legacy security systems and processes leading to low levels of satisfaction from customers.

If the "bricks and clicks" model is to be successful for TSB, we recommend they use the plethora of fintech platforms and opportunities rather than relying on Sabadell's existing suite of platforms and services. Perhaps this way, they can become a truly modern bank.



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