2022
9
UK Branch Banking Market Report 2022
2022-07-26T04:03:31+01:00
OX1103153
2195
153548
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Report
en_GB
“Despite the long-term shift towards digital banking, branches still have a role to play for many consumers. Satisfaction levels remain high despite widespread branch closures in recent years. This will…

UK Branch Banking Market Report 2022

£ 2,195 (Excl.Tax)

Description

The UK Branch Banking Market Report 2022 identifies consumers’ attitudes towards visiting physical branches, the rise of the online banking channel, and the impact of the cost-of-living crisis on the UK retail banking market. This report covers the UK branch banking market size, market forecast, market segmentation and industry trends for the UK Retail Banking market.

Current Market Landscape

UK branch banking statistics show that despite the popularity of online and mobile banking, younger demographics are the most likely to visit branch banks. Customers feel reassured by the presence of actual people – this particularly appeals to those who are less financially experienced.

The shift towards digital banking services and online customer service will continue to accelerate though as more bank and building society branches close. However, some providers may delay closures to help support people through the cost-of-living crisis.

UK Banks Market Share and Key Industry Trends

Closures are set to continue as banks look to save costs and focus on digital channels, however, shared hubs will retain access to cash and some basic banking services. Continued closures pose a threat to the UK retail banking market. These purely online channels will be tested if consumers are left with further travel for cash and more complex banking needs.

The rising cost of living, high inflation rates and soaring energy bills will have an impact on the future of branch banking. There could be pressure for banks to postpone planned closures to offer continued support during the cost-of-living crisis as a significant number of people are keen for their bank branch to offer guidance on the rising cost of living.

  • 73% of 16 to 24-year-olds have visited a branch in the last year.
  • 47% of people are keen for their bank branch to offer guidance on the rising cost of living.
  • 56% of customers have visited a branch to pay money into their account in the last 12 months.
  • 28% of customers have visited a branch to withdraw money from their account in the last 12 months.

The Future of Branch Banking

According to our UK branch banking market research, closures will slow as the UK banking market plateaus. Consumers will still want the reassurance of in-person advice, and customer service. The UK banking industry will change in that an increasing range of services will take place online and via expanded availability of video chat appointments.

UK retail banks have opportunities to reduce waiting times in-branch by focusing on wider availability of self-service machines to cater for basic cash banking, which is the most common reason for branch visits. This will free up counter staff to deal with more complex and tailored customer issues. Banks must offer more bookable appointments through online banking and apps to help customers plan their visit and reduce friction in the process.

Read on to discover more details or take a look at all of our UK Banking and Money Transmission Market Research.

Quickly Understand

  • The current size of the branch network in the UK across banks and building societies.
  • Branch usage, the purpose of visits and barriers to using branches.
  • The impact of the rising cost of living on expectations from bank branches.
  • Consumer satisfaction levels with branch banking.
  • Travel time and method for branch visits.
  • Factors that would drive the use of bank branches.
  • Consumer attitudes towards branch banking.

Covered in this Report

Brands: Lloyds Bank, Halifax, Bank of Scotland, Barclays, NatWest, RBS, Ulster Bank, Coutts, Nationwide, HSBC, Santander, TSB, Virgin Money, Clydesdale Bank, Yorkshire Bank, Handelsbanken, Skipton Building Society, Metro Bank, Principality Building Society, Coventry Building Society, Leeds Building Society, Co-operative Bank, Nottingham Building Society, Danske Bank, West Brom Building Society, Newcastle Building Society, The Cambridge Building Society, Bank of Ireland, Progressive Building Society.

Expert Analysis from a Specialist in the Field

This report, written by Adrian Reynolds, a leading analyst in the Finance sector, delivers in-depth commentary and analysis to highlight current trends in the UK Retail Banking market, and adds expert context to the numbers.

Despite the long-term shift towards digital banking, branches still have a role to play for many consumers. Satisfaction levels remain high despite widespread branch closures in recent years. This will be tested as customers seek further support through the cost-of-living crisis, with less financially experienced younger consumers particularly seeking guidance. With waiting times in-branch a key factor, additional self-service machines will be important alongside wider availability of bookable appointments for more complex issues and advice.

Adrian Reynolds
Adrian Reynolds
Senior Finance Analyst

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • Market context
    • Products covered in this Report
  2. Executive Summary

    • The market
    • Closures will continue but branches will not disappear completely
      • Figure 1: Category outlook, 2022-27
    • Further widespread branch closures expected in 2022
      • Figure 2: Number of branches in the UK, 2016-21
    • Customers could need more support from banks as confidence declines
      • Figure 3: Consumer financial sentiment, 2021 and 2022
    • The consumer
    • Branches are still playing a key role for many customers
      • Figure 4: Use of bank branches, 2022
    • The majority of branch visits can be dealt with by self-service machines
      • Figure 5: Reasons for visiting branches, 2022
    • The majority of those not visiting simply prefer digital banking
      • Figure 6: Reasons for not visiting branches, 2022
    • Increase the number of self-service machines and promote awareness
      • Figure 7: Key drivers of overall satisfaction with most recent bank branch visit, 2022
    • Expand appointment availability to help customers plan their journey
      • Figure 8: Travel time to branch, 2022
    • The rising cost of living could increase the need for advice
      • Figure 9: Important factors to increase branch use, 2022
    • Retaining access to cash will be vital
    • Young customers are more likely to travel further for additional services
      • Figure 10: Attitudes towards branch banking, 2022
  3. Issues and Insights

    • Reposition bank branches to suit the needs of young consumers
    • Increase availability of self-service machines to reduce waiting times
    • Make bookable appointments a seamless experience
    • Highlight video banking as an additional channel rather than a replacement
    • Branches must offer customers guidance on the cost-of-living crisis
  4. Market Size and Performance

    • Closures will continue but branches will not disappear completely
      • Figure 11: Category outlook, 2022-27
    • Further widespread branch closures expected in 2022
      • Figure 12: Number of branches in the UK, 2016-21
    • Branch closures bringing renewed focus on access to cash
      • Figure 13: Cash machine numbers, 2000-21
  5. Market Segmentation

    • Banks account for the vast majority of branch closures
      • Figure 14: Market segmentation, 2015-21
    • London has lost the most branches but still has more than other regions
      • Figure 15: Number of branches, by region, 2021
    • Northern Ireland offers the highest number of branches by population
      • Figure 16: Bank and building society branches per 10,000 population, 2021
  6. Market Drivers

    • Access to cash will remain important as branches close
      • Figure 17: Weekly payment methods, 2021
    • Consumers still want the option of in-person service
      • Figure 18: Contact preferences, by issue, 2022
    • Customers could need more support from banks as confidence declines
      • Figure 19: Consumer financial sentiment, 2021 and 2022
    • Highest inflation levels in 40 years hitting household finances
      • Figure 20: CPIH and CPI, 12-month rates, 2019-22
    • Rising grocery prices and energy bills are major concerns for households
      • Figure 21: Factors impacting financial situation, 2022
  7. Regulatory and Legislative Changes

    • FCA updates guidelines as more bank branches close
    • Expanded powers for FCA on ensuring access to cash
    • Bank branches will be impacted by the FCA’s Consumer Duty
    • FCA reinforces the need for cost-of-living support
    • Government updates financial support following energy cap rise
    • Student loan interest rates are set to rise in England and Wales
    • FCA to jointly oversee future of Open Banking in the UK
    • Open Banking adoption could benefit as FCA drops the 90-day rule
  8. Competitive Strategies and Innovation

    • Banks continuing to close branches throughout 2022
    • Reduced operating hours and service evident and some retained branches
    • Banks shift towards micro-branches and pop-up sites
    • Nationwide commits to keeping branches open to help with the cost-of-living crisis
    • Banks look to shared hubs to help retain access to cash and basic services
    • Reduced branch service will see further investment in video chat appointments
    • Halifax looks to boost branch inclusivity
      • Figure 22: Halifax’s name badge tweet, 2022
    • It will take considerable time for Metaverse branches to play a role
  9. Market Share

    • Major banks accounting for a smaller share as branches close
      • Figure 23: Number of branches and market share, 2021/22
    • NatWest has the highest branch-to-customer ratio of the major retail banks
      • Figure 24: Branch-to-customer ratio, 2021/22
  10. Use of Branches

    • Branches are still playing a key role for many customers
    • Over half of branch-based customers have visited a branch in the last six months
    • COVID-19 accelerated the shift to digital banking
    • Branches will remain important for cash services
      • Figure 25: Use of bank branches, 2022
    • Younger consumers are active branch users
    • We could see a long-term increase in the number of “branch nevers”
      • Figure 26: Use of bank branches, by age, 2022
  11. Reasons for Visiting Bank Branches

    • The majority of branch visits can be dealt with by self-service machines
    • Be proactive in driving awareness of financial products and services
    • Younger customers are the most likely to open accounts in branch
      • Figure 27: Reasons for visiting branches, 2022
  12. Barriers to Visiting Branches

    • The majority of those not visiting simply prefer digital banking
    • Enhance customer service to match the convenience of digital banking
      • Figure 28: Reasons for not visiting branches, 2022
    • Branch closures are being felt more by older customers
    • Younger customers are more likely to be put off by waiting times
      • Figure 29: Reasons for not visiting branches, by age, 2022
  13. Branch Banking Satisfaction Levels

    • Satisfaction levels are currently high but could be tested as more branches close
      • Figure 30: Overall satisfaction with branch banking experience, 2022
    • Banks are scoring highly on new product information
      • Figure 31: Overall satisfaction with branch banking experience, by reasons for visit, 2022
    • High satisfaction with staff friendliness reflects the desire for human interaction
      • Figure 32: Satisfaction with elements of branch banking, 2022
  14. Key Driver Analysis for Bank Branch Visits

    • Increase number of self-service machines and promote awareness
    • Waiting times could become a major issue as more branches close
    • Do not underestimate branch aesthetics and design
      • Figure 33: Key drivers of overall satisfaction with most recent bank branch visit, 2022
  15. Travel Methods for Branch Visits

    • Help customers plan their journey to branch appointments
    • Maintain branches on local high streets
      • Figure 34: Travel methods for branch visits, 2022
    • Expand appointment availability to help customers plan their journey
      • Figure 35: Travel time to branch, 2022
  16. Important Factors to Increase Branch Use

    • The rising cost of living could increase the need for advice
      • Figure 36: Important factors to increase branch use, 2022
    • Offer tailored support for younger consumers with less financial experience
    • Target younger consumers to drive in-branch engagement
      • Figure 37: Important factors to increase branch use, by age, 2022
    • Appointments and self-service machines are vital…
    • …while financial advice can drive engagement further
      • Figure 38: TURF Analysis – Branch Banking, 2022
  17. Attitudes towards Branch Banking

    • Retaining access to cash will be vital
    • Young customers are more likely to travel further for additional services
      • Figure 39: Attitudes towards branch banking, 2022
    • Consumers are clinging on to branches
      • Figure 40: Attitudes towards the need for branches, by age, 2022
    • Branches must offer younger customers support through the cost-of-living crisis
      • Figure 41: Attitudes towards branches and the rising cost of living, by age, 2022
    • Consumers still need convincing that video chat can replicate branch service
    • Offer video appointments with local staff to build rapport
      • Figure 42: Attitudes towards video chat services, by age, 2022
  18. Appendix – Data Sources, Abbreviations and Supporting Information

    • Market size data
    • Abbreviations
    • Consumer research methodology
  19. Appendix: Key Driver analysisAppendix – Key Driver Analysis

    • Methodology
    • Interpretation of results
      • Figure 43: Overall satisfaction with most recent bank branch visit – – key driver output, May 2022
    • TURF analysis methodology
      • Figure 44: Table – – TURF Analysis – Branch Banking, May 2022

About the report

This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.

Market

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Mintel’s proprietary consumer research provides our analysts with the attitudinal and behavioral data used to provide valuable insight to topical issues.

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Data

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*databooks not available with UK B2B Industry reports.

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