Despite regular reports of its imminent death, the British bank branch is not going anywhere for some time, suggests a new report from the FCA which says that, even with the rise of mobile banking, physical networks are still crucial in attracting new customers and fending off competitors.
In recent years, high street banks across the UK have slashed their branch networks, while a host of new digital-only challengers have also entered the scene, taking advantage of the surging popularity of mobile services.
In a review of retail banking models, the FCA (Financial Conduct Authority) notes that the number of UK bank and building society branches fell by 22% between 2012 and 2016. The trend is set to continue, as branch transactions have fallen even more steeply, down 42% between 2011 and 2016.
In contrast, the total customer current account interactions via mobile apps rose 354% between 2012 and 2017.
Yet, the FCA says that branches continue to play an important role in banks' competitive strategies. Customers still visit branches to open new current accounts and purchase further products, such as savings accounts.
Even for existing customers, branches are considered an integral element of the full-service model, with 63% of Brits using face-to-face services in 2017. Nearly half also used an in-branch self-service machine over the last year.
With this in mind, banks tell the FCA that branches will continue to play an important part for them in the medium term. However, traditional branches are being replaced by more tailored offerings, with some focusing on advisory services and others simply packed with self-service machines.
The FCA says it will keep a close eye on the future of branch networks and how this affects vulnerable customers and SMEs, as well as the business models of the banks themselves.
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