The total number of high street bank branches has halved over the past 20 years - and there’s more bad news to come, because the pace of closures has been accelerating.
In April, it was reported that HSBC was planning another major round of closures. There have also been reports speculating that RBS would be closing around 50 branches, and that Barclays would be closing more branches too.
These are just the latest in a long line of branches to be axed. Earlier this year, Lloyds announced that it was cutting another 26 branches – which means it’s around halfway through a three-year closure programme that will see a total of 200 axed (although it says it will also open another 50).
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Why?
The recent surge has been partly due to a strategy change among the banks. Before 2014, three of the big four had voluntary pledges in place not to close the ‘last bank in town’, so that every community could rely on having a local branch.
These were complex promises - and there were loopholes - but to some extent it put the brakes on their closure programmes.
However, in 2014, they abandoned the pledge and set about closing the last remaining banks in hundreds of communities across the UK.
The rate at which banks were closing increased alarmingy. According to the Campaign for Community Banking, we saw just under 200 branches closed in 2013, but after the U-turn this soared to almost 500 in 2014 and over 650 in 2015.
The types of areas most likely to be left without a branch as a result were market towns, rural hubs, secondary or tertiary areas within cities, and seaside or retirement towns.
The British Bankers’ Association (BBA) Access to Banking Protocol was introduced in May 2015 in an attempt to protect customers. This included rules insisting that banks consult with customers and assess the impact on the community before closing.
Sadly, this seems to have done little to slow the flood of closures, and since the protocol was introduced less than a year ago, Barclays – for example - has closed 114 branches.
However, the banks have not all been equally keen to do away with their network. We looked back over the past six years of branch closures. It isn’t easy to compare these, as not all the banks will release data, and the BBA only has figures up to 2013.
However, the Campaign for Community Banking has been keeping an eye on closures since, and compiled a list of the best and worst banks for closures.
Heavy cuts
Top of the list for the most branch closures is HSBC, which has lost 397 branches since 2010, and opened five. This means it has also lost just shy of a third of its network – with heavy cuts announced in 2014 and 2015. This year, it has already shut 78 branches and has plans for a further 53 branches.
In second place is the Royal Bank of Scotland Group, which incorporates RBS and Natwest. The bank does not divulge details of branch closures, but says that the current network includes1,090 NatWest branches and 210 RBS branches – this is a reduction of around a quarter of its network during the period.
The Campaign for Community Banking does highlight, however, that up until 2014 Natwest had the most generous approach to keeping the last bank in town open. The closures since it dropped this pledge are therefore likely to have been a number that had been unprofitable for years.
Third place, meanwhile, goes to Barclays, which has closed almost one in five of its branches in the past six years.
Other end of the scale
The fewest closures during this period came courtesy of the Lloyds Group, which includes Bank of Scotland and Halifax as well as Lloyds. Since 2010, the branch network has shrunk by just over 10%.
This is owes much to the fact that between 2011 and 2014 it pledged not to close a single branch.
A Lloyds Banking Group spokesperson told loveMONEY: "Customers are changing the way they choose to bank with us, which has resulted in branches being used less often.
“The Group is responding to this, and in 2014 announced plans to close 200 branches and open a further 50.
We remain committed to our branches across Lloyds Bank, Bank of Scotland and Halifax brands and expect to continue to have the biggest branch network in the UK. This currently stands at over 2100 branches.”
Second place in the list of the banks with fewest closures is an unusual one: Santander.
Whilst the bank in fact closed branches during this period, this wasn’t a decision to pull out of an area, it was a result of the fact that the company was formed by a merger of a number of businesses, so it was closing overlapping branches in the same area.
A spokesperson explained to loveMONEY: “Santander had multiple branches in some towns as a result of our acquisitions in 2008, and by reducing inefficiencies we’ve been able to reinvest in our branches and improve the facilities and experience for our customers.
“By the end of 2015, almost half of the network, including all of the largest and busiest branches had been refurbished and this will continue in 2016. We are committed to maintaining employment by retaining colleagues through redeployment.”
The Campaign for Community Banking recognises this as a special case. However, it points out that the companies that went to form Santander were open in large town centres, and not in the kinds of places that its competitors are closing branches, so it is likely to be under less pressure to pull of areas entirely anyway.
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Is this fair?
All in all, there are now fewer than 8,400 bank branches across the country. According to the BBA, this is down from 10,084 in 2010. Analysts at Deutsche Bank AG expect the total to fall to as low as 3,000 within the next decade.
The banks say they are simply responding to changes in the way people use their services.
The RBS group spokesperson explained: “Over the past five years, we have seen an overall reduction of footfall at our branches of more than 40%... and customers are rapidly moving their banking on-line.
“In overall terms, 93% of contact with the bank is now completed via the telephone, internet or smartphone, plus 97% of cash withdrawals are made via an ATM.” As a result, it makes less business sense to keep the branches open.
The trouble is that banks are more than just businesses to the people who use them. For many people, they are a vital lifeline, a cornerstone of the community, and something to which a lack of internet access, or a dearth of confidence around cards and new technology means some people have no alternative for.
The banks have tried to introduce solutions for this group. Natwest and RBS, for example, have opened access for customers to use banking services in 11,500 Post Offices.
A spokesperson explained: "We understand branch closures may cause concern for some of our customers. We have put in place a number of measures to help, including a partnership with the Post Office, so our customers can still carry out their day to day banking."
Barclays meanwhile has teamed up with Asda, and has eight Barclays Essentials banks in stores, offering longer opening hours as well as possible access to those who have lost a branch.
Unfortunately, there will be people for whom these options offer no real solution. For them, there is no suitable or acceptable alternative to a branch near their home. The problem is, as time goes on, it’s increasingly likely that their branch won’t make the cut, and they will be left stranded.
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