Are Customers Really Letting go of Physical Banking?

The number of physical banking venues dedicated solely to financial services is decreasing rapidly, leading many commentators to speculate whether we’re witnessing the death of banking premises altogether.

This trend would indicate that customers have now fully transitioned to digital banking and are no longer interested in accessing banking services from specific locations. However, research suggests that a physical presence is still a major draw for customers.

Here, we’ll explore what’s happening to physical banking venues and how service provision is diversifying to marry commercial needs with consumer preferences.

What is happening to physical banking venues?

Use of physical banking venues is undoubtedly declining. At RBS, over-the-counter transactions have dropped by 43% since 2010, while online banking has grown four-fold.

This has resulted in all major banks scaling back their portfolio of premises. 26% of bank branches in the UK have closed over the last five years, with 600 individual branches closing from 2015 to 2016 alone.

Some banks are taking more of a lead on reducing their portfolio than others. Here’s an overview of the proportion of branches the UK’s major banks have closed since 2011 (Verdict):

  • Royal Bank of Scotland (in Scotland) = 43%
  • HSBC = 42%
  • Natwest = 31%
  • Barclays = 24%
  • Santander = 21%
  • Lloyds Banking Group = 12%

This rate of decline fails to tell the whole story, however. Many banks are re-organising their portfolios to create multi-service hubs in central locations, or partnering with other companies to provide physical banking services in new venues.

How are banking services diversifying to include new venues?

Rather than physical banking services becoming increasingly difficult to reach, new arrangements with other companies are making banking services more accessible than ever.

Here are some examples of the diversification of physical banking premises:

Post Offices

Since 2015, the Post Office has been cultivating partnerships with the UK’s major banks.

Today, 99% of personal bank account holders and over 75% of business bank account holders can conduct all their day-to-day banking tasks at the Post Office’s network of 11,500 branches.

Bank account holders can:

  • Withdraw cash
  • Deposit cash or cheques
  • Check their balance
  • Conduct real-time credit/debit transactions

Uptake of this service grew 6% during 2016 alone, with 110 million individual transactions being carried out (equivalent to over 200 per minute).


The collaboration between Barclays and Asda is just one example of major banks diversifying their locations by opening specialist branches in supermarkets.

Barclays Essentials branches have now opened in eight Asda superstores nationwide (with plans for more), enabling customers to deposit cash/cheques, make withdrawals, pay bills and transfer funds between accounts.

Smart ATMs

Smart ATMs have been around for a couple of years now, with NatWest and Nationwide among their most avid supporters.

With these devices, customers can deposit cash and cheques conveniently (even outside normal opening hours), pay bills and withdraw cash using a code provided by a dedicated app.

So, do you think you’re statistically more likely to be closer to a banking service, or to other amenities such as schools, shops or transport hubs? We’ll reveal the answer in our next edition.

Discover how Periscope® can help you make your banking assets more conveniently accessible to customers. Call our expert team and arrange a demo today.