UK has lost 40% of bank and building society branches since 1989

UK has lost 40% of bank and building society branches since 1989

More than 40% of Britain's bank and building society branches have disappeared since 1989, although the rate of closures has declined since the turn of the century, according to research.

The study from Nottingham University's Shaun French, Andrew Leyshon and Sam Meek shows that between 1989 and 2012 there was a net loss of nearly 7500 branches.

Although the rise of online and mobile banking are often cited as driving forces in the fall of branch networks, the rate of closures has actually slowed in recent years. Between 2003 and 2012, the rate of decline has been -1.7%, compared to -2.5% between 1995 and 2003.

The research also reveals that branches have been closing at a faster rate in more deprived parts of the country, with the least affluent third of the population bearing the brunt of two thirds of net closures from 1995 to 2012.

Between 1995 and 2012, regions defined as "traditional manufacturing" and "built-up" areas - characterised by above average unemployment rates and renting - lost 39% of their network.

French told the BBC that this could potentially push vulnerable people into the arms of "more predatory forms of institutions" such as payday lenders with very high interest rates.

The report's authors suggest that, despite the move towards digital banking, the branch has seen its place in society reappraised since the financial crisis. Branches "provided a sense of material security about the tangibility of the financial system to anxious customers" post-2008, they contend.

Banks have appreciated this, with the likes of Lloyds TSB and NatWest featuring branches more prominently in their advertising and the new Metro Bank using its place on the high-street as its main selling point.

Nevertheless, closures continue: this week it has emerged that HSBC is closing another five branches, blaming a lack of customers as people use online and mobile services.

Recently RBS subsidiary Ulster Bank says it will close up to 40 branches and lay off hundreds of employees across the island of Ireland as customers move to digital channels.

The trend is Europe-wide: Deutsche Bank says that the number of bank branches in the EU fell by 2.5% last year and predicts that massive cuts are ahead for southern counties such as Spain and Italy where networks are still substantial.

Comments: (1)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 21 August, 2013, 17:39Be the first to give this comment the thumbs up 0 likes

During the same period, I'm sure digital channel usage also declined from the same locations. Seems that overall business climate determines branch opening / closure rate, not digital channels. 

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