In years gone by, every town and high street would have included a handful of well-known banks but that’s no longer the case. Even the banks themselves have declined to sign up to a pledge to make sure there’s at least one branch in every town.
It’s not a phenomenon that’s limited to the UK either; all over the world, traditional banks are gradually disappearing and being replaced with more efficient services.
Here’s a look at the decline of high street banks and the alternatives which are replacing them.
Why are all the High Street Banks Closing?
Traditionally, customers choose their bank partially based on location; people didn’t join a bank which didn’t have a local branch. There were lots of services which needed to be conducted in-branch, from paying in a cheque to applying for a loan, and everything in between.
However, as technology has evolved more customers have started to take advantage of the online services that banks have offered. In turn, this meant that the number of customers visiting the branches shrank. Some branches reported seeing less than 10 customers per day.
With many banks keen to cut costs, particularly with some still partially in recovery following the financial crisis, there were no longer an appetite to keep branches open. While it’s true that a minority of customers found this to be an inconvenience, for the majority of people it simply wasn’t an issue.
The truth is that banking habits have simply changed, with the majority of transactions and services now available online. Many millennials have never visited a bank, nor are they likely to need to do so in the near future. Perhaps it’s time to accept that traditional banking isn’t a significant part of the financial future?
The banks closing their branches doesn’t mean that options are being narrowed; if anything, the reverse is true. While in the past customers have been more restricted in choice due to geographical location, now they’re able to consider a much wider selection of financial providers.
The ability to choose from a wider pool means that it’s no longer just the traditional banks who are vying for customers. Now, there’s also a whole host of new digital banking services to choose from. Many of these don’t have a physical branch, and never will. Instead they’re set up completely as a digital service – which for many customers, ticks every box.
Modern customers want to be able to access their money easily, when they need it. Many of the additional services that banks offer are unnecessary and aren’t taken up by customers. For example, if they want a loan, they won’t automatically go to their own bank. Instead, they’ll shop around to get the best deal. This means that they’re not looking for the provider who has the widest range of services.
Digital providers are set-up for online and mobile banking and offer easy access to money with simple and transparent processes. For many modern banking customers, millennial or otherwise, this is everything they need in their provider – and it’s why they’re turning to apps, digital services and other online methods instead of traditional high street banks.