Table of Contents
Executive Summary
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- Impact of COVID-19 on branch banking
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- Figure 1: Short, medium and long-term impact of COVID-19 on branch banking, October 2020
- The market
- Bank branch closures accelerate
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- Figure 2: Number of branches in the UK, 2016-20
- Building societies account for a growing proportion of branches
- Consumer behaviours are negating the need for branches
- Companies and brands
- Lloyds has the largest branch network
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- Figure 3: Estimated branch numbers of individual banking brands, 2019/20
- TSB has the highest branch to customer ratio
- Everyone is restructuring branch networks
- Physical space is important, so re-invent it, don’t lose it
- The consumer
- Young people are more likely to have visited a bank branch
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- Figure 4: Reasons for visiting a branch, August 2020
- Most people travel less than 15 minutes to a branch
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- Figure 5: Time spent travelling to a bank branch, August 2020
- Two thirds visited a bank on the high street
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- Figure 6: Location of branches visited in the last 6 months, August 2020
- COVID-19 has accelerated the shift away from branches
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- Figure 7: Impact of COVID-19 on branch visits, August 2020
- Blending humans and technology for the perfect visit
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- Figure 8: Important features of a bank branch, August 2020
- A physical presence helps build trust
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- Figure 9: Attitudes towards branch banking, August 2020
Issues and Insights
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- COVID-19 has accelerated the decline of branch banking
- The branch of the future will add value without being a necessity
- Physical banking needs to be flexible, adaptable and localised
The Market – Key Takeaways
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- Branch banking is in rapid decline…
- …but it’s not about to disappear
- Banks are closing branches faster than building societies
- Consumer behaviours are negating the need for branches
Market Size
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- COVID-19 has changed consumers’ relationship with branches
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- Figure 10: Short, medium and long-term impact of COVID-19 on branch banking, October 2020
- Decline in branches accelerates
- Branches are not about to disappear
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- Figure 11: Number of branches in the UK, 2016-20
- What happened after the last recession
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- Figure 12: Number of branches, 2010-14
Market Segmentation
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- Bank closures outstrip building societies
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- Figure 13: Market segmentation, 2016-20
- London has the largest share of branches
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- Figure 14: Number of branches, by region, 2020
- East Midlands has the fewest branches per head
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- Figure 15: Population per branch, by region, 2016-19
Market Drivers
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- Steady growth in managing finances online
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- Figure 16: Managing finances online, by device, October 2017-September 2020
- Consumer preference for branch services declines
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- Figure 17: Preference for using in-branch services for retail banking activities, 2018 and 2020
- COVID-19 prompts half of people to avoid cash
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- Figure 18: Avoidance of cash due to COVID-19, April-November 2020
- Decline in cash machine availability
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- Figure 19: ATM network, 1998-2019
- Shift to online shopping reducing high street footfall
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- Figure 20: Forecasted share of retail sales, by channel, 2015-24
- Adapting branches to changing behaviours
Regulatory and Legislative Changes
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- Access to cash
- Guidance for closures
- Protecting the vulnerable
Companies and Brands – Key Takeaways
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- Lloyds has the largest branch network
- TSB has the highest branch to customer ratio
- Everyone is restructuring branch networks
- Physical space is important, so re-invent it, don’t lose it
Market Share
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- Lloyds Banking Group accounts for a fifth of all branches
- Further closures are planned
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- Figure 21: Number of branches and market share, 2019/20
- TSB closures bring it closer into line with others
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- Figure 22: Branch to customer ratio, 2019/20
- Retailer banks offer ready-made physical space
- Using the Post Office as a backup can’t be relied upon
Competitive Strategies
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- Lloyds Banking Group
- Barclays
- NatWest Group
- Nationwide
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- Figure 23: Nationwide ‘4C’ branch layout, 2020
- HSBC
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- Figure 24: HSBC Birmingham branch
- Santander
- TSB Bank
Innovation and Launch Activity
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- A space to learn, work and play
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- Figure 25: Santander Work Café
- Taking banking outside of the branch
- Protecting the vulnerable
- UK’s first cashless bank branch
The Consumer – Key Takeaways
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- Young people are more likely to have visited a bank branch
- COVID-19 has accelerated the shift away from branches
- Blend humans and technology for the perfect visit
- A physical presence helps build trust
- Do not underestimate the importance of branches to local communities
Reasons for Visiting a Branch
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- Half have visited a branch to make a cash transaction
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- Figure 26: Reasons for visiting a branch, August 2020
- Young people are more likely to have visited a branch
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- Figure 27: Reasons for visiting a branch, under-45s vs over-45s, August 2020
Time Spent Travelling to a Bank Branch
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- Majority travel less than 15 minutes to a branch
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- Figure 28: Time spent travelling to a bank branch, August 2020
- 25-44 year olds either drop in or travel further
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- Figure 29: Time spent travelling to a bank branch, by age, August 2020
Branch Location
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- Two thirds visited a bank on the high street
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- Figure 30: Location of branches visited in the last 6 months, August 2020
- Older people are more reliant on high street branches
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- Figure 31: Location of branches visited, by age, August 2020
Impact of COVID-19 on Branch Banking
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- Half of people are visiting bank branches less because of COVID-19
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- Figure 32: Impact of COVID-19 on branch visits, August 2020
- Almost half expect to go back to normal after the pandemic
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- Figure 33: Post-COVID-19 expectations, August 2020
Important Features of a Branch
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- Convenience and speed are key
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- Figure 34: Important features of a bank branch, August 2020
- Enhance the experience by blending experts with technology
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- Figure 35: TURF Analysis – The role of the branch in retail banking, September 2020
- Integrate digital and physical to make the branch experience seamless
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- Figure 36: Features that would encourage bank visits, August 2020
Attitudes towards Branch Banking
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- Bank branches are a way to build trust
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- Figure 37: Attitudes towards branch banking, August 2020
- Branches are seen to play a key role in communities
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- Figure 38: Attitudes towards branch banking, August 2020
- Consumers are not entirely convinced by digital banking services
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- Figure 39: Attitudes towards branch banking, August 2020
Future of the Branch – Customer Segmentation
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- Figure 40: Cluster analysis of consumer attitudes towards branch banking, August 2020
- Key demographics
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- Figure 41: Age profile of cluster groups, August 2020
- Where they bank
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- Figure 42: Where they bank, by cluster analysis, August 2020
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Appendix – Data Sources, Abbreviations and Supporting Information
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- Market size data
- Abbreviations
- Consumer research methodology
- TURF analysis methodology
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