Go back not that many years and any reasonably-sized town would have had the ‘big four’ on its high street: Barclays, Lloyds, NatWest and HSBC occupying prominent retail positions and – if the town was slightly larger – quite possibly a branch of TSB, RBS and Yorkshire Bank as well. North of the border they were joined by Bank of Scotland and Clydesdale Bank.
The bank managers were pillars of the local community – and banking offered a ready-made career path for the town’s graduates and school-leavers.
Now we see a complete turnaround: going back just a few years, the term ‘challenger bank’ was widespread: banks such as Revolut, Starling and Monzo who were ‘challenging’ the established big four. The term is less used today simply because these banks – and you can add Allica, Atom Bank, Clear Bank, Bank North and others to the list – have become the first port of call for both business and retail customers.
Why this has happened is probably a combination of several factors. Possibly the biggest is the rise and rise of fintech: without question, the app on your phone is now far more important than the reputation of the local branch manager – or the expensive ad on TV.
The pandemic made it almost impossible to visit a bank branch in person. Anecdotally, many people will tell you they simply cannot remember the last time they went into a bricks and mortar bank branch.
Young people are increasingly taking a bank’s ‘green record’ into account when making a decision – and it is far easier for a mobile-only bank to demonstrate a commitment to the environment than a network of high street branches you need to drive to.
So what are the implications of all this for the UK high street?
According to one recent survey, from the Economist Intelligence Unit and Temenos, 70% of European banks believe that bricks and mortar banking will be ‘dead and gone’ in just three years. According to recent research from Which?, almost half of the UK’s bank branches (over 4,700) have been closed since 2015. Now, as apps and artificial intelligence continue to advance, it looks like the rest of the branches could go the same way.
You suspect that some branches in city centres could survive – but it seems inevitable that many towns will shortly find themselves without a physical bank branch – and with large holes in their high streets.
One solution being mooted is ‘pop-up’ banks in the hundreds of empty premises that the pandemic and the current cost of living crisis will inevitably bring. We may well see banks sharing premises as a way of cutting costs. One thing is certain, the days of the high street bank and the well-respected local bank manager are gone – and they will not be coming back.
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