Santander has announced plans to close 140 branches across the UK, citing consumer habits and the move to digital banking
Santander UK is one of the leading financial services companies, but the number of branch transactions has fallen 23% in the last 3 years, forcing the company to reform operations.
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The growth of online and mobile banking has played a role in causing Santander UK branch closures
Santander has cited the decline in bank transactions as a major factor in its decision. The move away from physical banking has also coincided with the drive for online and mobile banking, which has taken off in recent years.
Mobile banking in particular has surged in popularity, as customer attitudes have experienced a huge shift and the trust in these services has strengthened. Santander UK has stated that online and mobile transactions have soared by 99% in the last 3 years. Expectations are the growth trend will continue for a longtime to come.
The UK growth of the online retail sector, which grew by 8.2% in 2017 to reach a value of $56.6 billion, has further driven the demand for digital banking services, diminishing the need for physical branches.
Many customers still rely on traditional banking
Closures have been most prevalent in small towns, forcing customers, particularly the elderly who are less engaged in digital banking, to travel long distances to banking services. Despite the prevalence on online baking, the news of further closures will come as a blow to the large number of people and small businesses who still rely on traditional banking.
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By GlobalDataClosures across the UK have left 19% of the population more than nearly two miles away from their nearest branch, with Scottish Highland communities the worst hit.
To combat this, major banks such as Santander have invested in offering banking services in selected Post Office sites, which are currently available in 11,000 sites across the UK.
The bank has also announced an investment of £55m in the refurbishment of 100 branches, with the aim of providing improved convenience and community engagement. However, for customers who need the full range of services, this has done little to alleviate the implications of branch closures.
Trend towards digital banking is present across the industry as a whole
Research conducted by consumer group Which? found that approximately two-thirds of UK bank branches had been closed in the past 30 years. The number of banks and building societies has fallen from 20,583 in 1998, to around 7,586 branches now.
Branch closures are not isolated to Santander, a swathe of other major players within the industry have also taken a similar approach. Banks including Lloyds, HSBC and RBS have significantly reduced their physical footprint in a bid to cut costs, suggesting that branches will play a minor role in the future of banking.
