Channel Hopping: In Branch vs. Online Banking

Financial Services Team Blog

James Carnegie

With the recent announcement that Lloyds Bank is cutting a further 9,000 jobs and the net closure of 150 branches over the next three years, this prompted me to wonder what the future of banking on the high street might entail and whether this will be fair to customers of all ages and technological abilities.

With increasing numbers of banking customers, myself included, predominantly using online and mobile channels to manage both current and savings accounts, how necessary will a high street branch be in the future?

Indications are that branch networks will become leaner but still exist in order to offer a face to face service for those who want it, as well as for transactions where such interaction remains a necessity. A caveat is that many will have to travel further to get this service, but broadly this seems a common sense approach as there does appear to be a divide in terms of how people prefer to interact with their banks. Less technologically confident customers (who tend to be older) prefer to stick to the channel that they are familiar with historically. Harris Interactive research from earlier in 2014 explores this area in further detail.

Nevertheless, given the cost of opening and maintaining each branch, it is logical that many banking brands are eager to reduce the number of high street branches and encourage as many customers as possible to “embrace technology”. Indeed, Barclays recent “Digital Eagles” advertising campaign goes beyond suggesting customers use online channels merely for banking, but also depicts a member of staff helping an older gentleman (Kent) to use Skype in a television advert. In the future, might we see banks utilise such technology to provide a visual interaction with customers as opposed to using branches?

Despite this, it appears that banks still appreciate the necessity of having high street branches (with the exception of zero branch banks such as First Direct). The “challenger” brand, Metro Bank, which currently has 27 “shops” (their term for what are typically known as branches) is bucking the trend and wants to open a further 223 (an 826% increase on the current number) by the end of 2015. With their branches being open seven days a week and twelve hours a day on weekdays, it appears Metro Bank are trying to replicate “the banking in your own time” idea offered via the internet on the high street as best as they can. Such behaviour suggests an acknowledgement in the belief that offering face to face services is required for many customers to consider using a provider for their banking needs. It will be interesting to see how successful these different approaches to branches are in engaging consumers.

It would be unfair to customers who lack the confidence or equipment to use online or mobile methods of banking not to have the opportunity to continue to conduct banking transactions in person. Barclays’ “Digital Eagles” initiative seems like a great idea to try and encourage customers to embrace technology, but the decision of someone not to needs to be respected. Banks, therefore, need to tread carefully when deciding where to maintain their branch network in the future and where closures are made to ensure their customers are being served as required. For further insight into what banking customers want then click here.

A failure to get this balance right may result in account transfers and further criticism being levelled towards the banking sector. Britain’s banks need to be particularly wary of this given the news last week that the Competition and Markets Authority has confirmed that it is going to launch an in-depth market investigation into the personal current account and SME retail banking sectors.

I will be sticking to using the internet for the vast majority of my banking, but it is reassuring to know that I can always pop in to a branch on the sporadic occasions when I want to. This is something I do not want to change in the future and probably echoes the sentiments of many others.


  • Customer Experience
  • Online Banking
  • Retail Banks