Are the High Street Banks Disappearing Forever? Maybe not

Chris Cave our consultant managing the role
Posting date: 04 July 2024

If you live or work near a city or town centre, you probably have to think twice about where your bank’s local branch is. In 2024, the high street bank and building society branch network is dying, with numbers declining from over 10,000 in 2010 to fewer than 5,000 in 2023. But why? 


The rise in exclusively online challengers like Revolut and Monzo, as well as the ageing population becoming more comfortable with remote and digital channels, means we don’t need that cash counter any more. We don’t even need an ATM to take out paper money, which is unsurprising given that in the city of London, you’ll struggle to find food retailers prepared to take cash. 


Part of the idea for writing this piece was inspired by my visit to a remaining branch near our office to discover they won't even discuss savings. To my surprise, they’re purely there to discuss mortgages - and very little else. Oh, and they have a coffee shop in there, too, which brings in some revenue on a daily basis. Fancy that - the bank would rather sell coffee than talk about anything other than mortgages. 


But this isn’t a complaint. I applaud the initiative to make the expensive space they rent work for them in some form - because it’s probably the reason that the other branches in the area have closed. Sometimes, I think the most confusing question you can ask anyone in the city is where is the nearest Barclays, or HSBC, or Lloyds? Try it and watch their faces. 

The high street branch is dying - but it’s not dead yet!

Before recruitment, I was the sort of person who didn’t know what they wanted as a career. An easy route for types like me back in the day was working for a bank. I did a lot in my time, working across several big names, and it’s rare that I go to a client meeting today without walking past a branch where I once worked.


It was a time I remember fondly because of the great teams I worked with, not to mention the social aspect as the doors had to be locked by 5:30 p.m. I also remember how we were measured and rewarded for success. There were several pots: Banking, Savings, Unsecured Lending, Mortgage Lending, General Insurance (including PPI) and Financial Adviser referrals.


It doesn’t take an economics degree to know that the biggest margin came from insurance, mortgages, Unsecured Lending and of course getting customers to invest via the financial advisers. Contrastingly, if you manage to find a high street branch today (not including the aforementioned glorified coffee shop), you'll have a very stripped back menu. Lower margins + lower footfall = doors closed. 

A light at the end of the tunnel?

Perhaps the new simplified advice regime will change things. The FCA aims to create a retail investment market that consumers can trust and that is sustainable for businesses. 


Consumers face complex financial decisions and assistance isn’t available to many, certainly not like it was a few years ago. The regulator’s Financial Lives 2022 survey suggests just 27% of non-retired adults have given much thought to how they will manage financially in retirement, while 33% haven’t thought about it at all. 


The simplified advice regime and Boundary Review could well be a lifeline to the high street banks and building societies, as well as a great route into the advice market for the new generation of planners. The number of authorised firms is shrinking when you consider the amount of acquisition and consolidation that has been happening over the last two years. 


The firms still practising also have the impact of consumer duty to consider. My colleagues and I at Hanover have been speaking to lots of advice businesses and the tide is turning from a few years back. Not long ago, new advisers had to be able to bring in some form of existing client bank to be sustainable. Now it’s looking like an environment where firms have too many clients to look after and a fiduciary responsibility to see them more frequently. 


So where will these clients go? If they move quickly, this presents an opportunity for a high street financial planner to help people who aren’t getting the frequency of service they deserve.

Addressing the gaps left by the Retail Distribution Review

The regulator has confessed that the Retail Distribution Review could have been handled better. Things were cleaner and a lot of complexity was removed - but at the expense of a huge slice of the population who probably needed financial guidance more than the UHNW clients most IFAs aspire to have in their portfolio. 


In fact, with a trend of advisers turning away low-asset clients, the number of consumers paying for financial advice has fallen to just 9% this year, evidence that the advice gap continues to widen. 


The purpose of the Boundary Review is to provide consumer support in three areas:

  • Further clarifying when firms can give consumers support without giving regulated financial advice
  • An innovative approach allowing firms to provide support tailored to groups of people in similar circumstances
  • A new form of simplified advice that makes it easier for firms to provide affordable personal recommendations to clients with more straightforward needs and smaller sums to invest


It would be great if there was a national network of convenient locations which could readily support an existing client base with these ideals.

Opportunities ahead

Nationwide have famously made a point of keeping branches open with a humorous TV ad campaign and in February this year, their financial planning service moved to Aegon Financial Planning - an amazing opportunity for the latter to leverage a branch network for a greater reach. 


If you’re a high street bank with a licence to sell regulated investments, surely it’s an option to consider making use of the few branches left in our town centres with some simplified advice for people who genuinely need it.


And while they’re in, see if they want to switch bank accounts and get a personal loan to help their teenage son get a ULEZ compliant car. Everybody wins.


If anyone wants to talk about the old days of branch life, I’ll be at the Wetherspoons over the road at 5.31. Or, for more advice, you can contact me directly.

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