Bank Closures: Which areas are likely to be ‘bankless’ by 2024? 

By Louise Potts, Head of Banking, Customer Advisory at SAS UK

The way that we bank has significantly changed in recent years, as banks respond to the needs of many businesses and consumers who choose to do their banking online, rather than visit the local branch. Whether it’s transferring money between accounts, applying for credit cards or paying your bills, online banking enables millions to enjoy instant access to their finances.

It is great for simple transactions and can enable staff in branches to focus on more complex issues. However, the general trend towards more online banking has led to numerous closures of banks and building societies across the UK’s high streets.

The financial ecosystem is undergoing radical changes, and a hybrid banking approach, whereby people and businesses have access to in-person and online banking capabilities, is important. Ultimately, the banks that succeed will be hyper-effective AI organisations that also use analytics to provide heightened responsiveness, tackle fraud, but also meet customer needs across all channels.

AI enables banks to stay relevant and develop a deep understanding of their customers, and take immediate action to improve their experience as they adapt to regulatory changes and tackle complex financial crimes. AI can use all relevant data to enable real-time decision making, which can determine fraudulent transactions in a matter of seconds, verify customers’ identity, and adopt fast, accurate credit scoring for digital banking.

But online banking isn’t always a viable option for everyone, so the fact that so many towns and cities across the country are seeing brick-and-mortar branches become obsolete could pose a problem for some customers that still rely on them. In-person banking services provide crucial services if you’re struggling to access the internet or find a solution online. In particular, they’re important for the vulnerable and elderly within the population.

Why does this matter?

A hybrid banking approach enables communities to get the best of both worlds. Online banking enables customers to manage their finances from the comfort of their homes or wherever suits them most, providing 24/7 accessibility.

However, some customers may also prefer to discuss complex financial matters, especially those that involve extensive paperwork or guidance, in person. Physical branches offer a tangible option for those who may not be comfortable with, or have limited access to, online services. 

And while online banking does provide access for banking services for individuals who may be geographically distant from physical branches, in-person branches remain crucial for those with disabilities that mean there are technological barriers, and to serve as hubs for those in the local community who have queries they’d prefer to resolve face-to-face.

Which areas have seen the biggest fall in bank branches across the UK?

While there are already bankless towns up and down the country, there are also dozens of rural areas that are at risk of the same, and almost half a million consumers are now on the cusp of being bankless in the next year with just one bank in their nearest town.

To explore the communities most likely to be without direct access to banks, SAS looked at seven major banks, and how many branches they currently have open in all local constituencies in the UK according to their websites.

We then compared this to the number of branches that were open in September 2020, to understand the percentage of the network lost in the last three years. We also investigated how many people each branch would theoretically need to serve, and a yearly branch loss rate for each constituency.

SAS research discovered there are already 28 constituencies that have zero banks, with St Helens North, Bradford South and Don Valley losing their last physical branch within the last three years. South Leicestershire saw five close, Edinburgh West had nine closures, and Nottingham East residents lost all four remaining branches.

But which areas with branches still open are likely to be at risk of the same fate in the next year?

The 10 areas most likely to be bankless in 2024

To understand the likelihood of areas likely to have zero bank branches in the next year, SAS compared the number of branches open in each constituency in 2020 and the number currently open in 2023, to understand a percentage of the network lost since 2020, and a yearly bank loss rate.

If the below constituencies continue on the same trajectory, local residents could be without any branches by 2024:

1 - Ross, Skye and Lochaber, Scotland (18,819 people per branch)
2 - Argyll and Bute, Scotland (8,626 people per branch)
3 - Dumfriesshire, Clydesdale and Tweeddale, Scotland (800 people per branch)
4 - Caithness, Sutherland and Easter Ross, Scotland (188 people per branch)
5 - Copeland, England (39,000 people per branch)
6 - South Down, England (123,121 people per branch)
7 - North Ayrshire and Arran, Scotland (20,320 people per branch)
8 - Central Devon, England (47,612 people per branch)
9 - Tewkesbury, England (112,255 people per branch)
10 - Gainsborough, England (98,796 people per branch)

The majority of the areas likely to have zero branches open within their constituency in the next year are rural, and not population dense. For instance, Ross, Skye and Lochaber, which has four branches left, has the lowest population density of any area office within the Highlands and Islands region, with four people per square kilometre. However, it also has an older age profile, meaning that people are likely to require in-person services more. 

The areas with the least branch closures

Only three constituencies in the UK saw a rise in the number of branches in the last three years, and 21 areas saw no change.

Burton, South East Cambridgeshire and Wolverhampton North East saw a rise by one branch. More central areas, such as Sheffield Hallam, Liverpool West Derby, Stoke-on-Trent North, Leicester East and Richmond Park, all saw the number of specific bank branches remain unchanged.

The 10 areas least affected by branch closures:

1 - Wolverhampton North East, England
2 - South East Cambridgeshire, England
3 - Burton, England
4 - Wentworth and Dearne, England
5 - Sheffield Hallam, England
6 - Liverpool West Derby, England
7 - Stoke-on-Trent North, England
8 - Central Suffolk and North Ipswich, England
9 - Chatham and Aylesford, England
10 - Derby North, England

However, it’s worth noting many of these areas are hanging on to just one bank in their area - including Stoke-on-Trent North, Sheffield Hallam, and Derby North.

The consistent presence of banks in these areas may reflect a certain level of footfall in these local economies. It’s important to note that the banking sector is dynamic, and is influenced by a myriad of things, including changes in consumer behaviour but also economic trends, local initiatives and government policies.

Are banking hubs the future?

Some experts believe that shared banks – or ‘banking hubs’ – are the answer to how residents and businesses can continue to benefit from physical bank branches, even if some banks can’t justify the overhead fees of their own brick-and-mortar branch.

Banking hubs involve a single building which can provide access to services provided by a number of High Street banks, giving people the option to deposit, transfer and withdraw cash from most major banks, just as they would do now at a typical branch.

These hubs are owned by Cash Access UK and run by the Post Office, as a way of bringing back banking facilities in an accessible way to the areas that need it.

There are currently seven hubs open in the UK, each having different schedules whereby they rotate banks each day. They’re located in London, Devon, Lanarkshire, Angus, East Yorkshire, Essex and South Ayrshire, with 61 additional hubs planned for communities across the UK.

They could serve as financial centres and foster growth in communities with a higher concentration of residents and businesses alike, improving financial inclusion. It could also benefit a number of communities with no bank branches, especially those in built-up areas serving many customers such as Edinburgh South West, Nottingham East and North Swindon, according to our research.

Methodology   

SAS looked at seven of the largest banks in the UK, and used previous research to understand how many branches were located in each constituency in 2020.

It then analysed the number of branches currently located in each constituency, to determine the rate at which branches closed over that period.

It also took population data from the 2021 Census.

Data correct as of September 2023. 

Louise Potts
Head of Banking, Customer Advisory, SAS UK