How bank closures are impacting consumers | moneyfacts.co.uk
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Derin Clark

Derin Clark

Online Reporter
Published: 03/03/2020

With both HSBC and Virgin Money revealing that they will both be closing branches this year, we take a look at how ongoing branch closures are impacting consumers.

HSBC and Virgin Money branch closures

HSBC has announced that it will be closing 27 branches in 2020, with closures set to start taking place from July. HSBC has stated that the branch closures are due to changing consumer banking habits, with the increase in customers preferring to bank online and via mobile apps. Stuart Haire, head of retail banking and wealth management at HSBC, explained: “In the financial services industry many more customers are using mobile and internet banking than ever before, also interacting with us on social media over 85,000 times in the last 12 months. The upshot is that significantly fewer people are using our branches.

“The decision to close these branches will help to ensure a sustainable branch network for the future and allow us to continue to invest in it, as illustrated by the improvement to 49 branches in 2020, along with the continuing investments in our people and digital platforms.”

Meanwhile, Virgin Money has announced that from May 2020 it will be closing a total of 22 branches, which will be across its Virgin Money, Clydesdale Bank and Yorkshire Bank brands. In addition to this, it will close a further 30 branches where it has more than one branch from its brands nearby.

Virgin Money has also cited customer banking habits as a key reason for the closures. Lucy Dimes, group business transformation officer at Virgin Money UK, said: “The decision to close branches is never taken lightly. The changes announced today are focused on consolidating branches where there is another Clydesdale Bank / Yorkshire Bank / Virgin Money location within half a mile as well as closing a number of branches to reflect changes to customer demand. As our customers change the way they want to bank with us, we are evolving the role of our stores - investing in all of the ways that customers are choosing to bank with us, including a reimagined Virgin Money presence on the high street. Following the unveiling of three new Virgin Money stores in December last year, the full rebrand of our national network of 166 stores begins in April and will be completed by September this year.”

Access to branches

Bank branches have been closing in the UK for decades, but the rate of closures seems to be increasing with more and more banks closing their doors every year. While younger and affluent customers are often happy to use alternative forms of banking, such as online or mobile banking, which is evident by the growing popularity of banks such as Revolut and Monzo, older customers and those on lower incomes are usually more reliant on banking in branch. Typically, those in rural areas are hit the hardest by branch closures, however there have been schemes set up to help these customers. For example, 29 high street banks have signed up to the Banking Framework agreement, which enables their customers to do everyday banking such as deposit cash, cheques, withdraw cash and access change and balance enquires at their local Post Office branch. Saying this, many Post Office branches are also under threat, which means some customers could be left without a local bank branch or Post Office.

How does not being able to bank in branch impact your saving rates?

Research carried out by Moneyfacts.co.uk has found that the majority of the top savings rates are currently available to those who are able to bank online or via mobile app. For example, the top five rates available on a one year fixed rate bond all require the account to be opened online or via mobile app, with just one savings provider including the option of being able to open the account by phone, as well as online. The highest one year fixed rate that enables savers to open the account in branch is Kent Reliance with its 1 Year Fixed Rate Bond – Issue 65. This account pays 1.50% gross, which is 0.15% less than the top paying one year bond in the chart, which comes from Bank of London and The Middle East paying an expected profit rate of 1.65% gross and which can only be opened online.

Top one year bond rates

Provider Account Rate Opening method
Bank of London and The Middle East Premier Deposit Account 1.65% (expected profit rate) Online
Atom Bank 1 Year Fixed Saver 1.60% Mobile app
Ikano Bank Fixed 1 Year Saver 1.56% Online
Cynergy Bank Loyalty Fixed Rate Bond 1.55% Online
Ford Money Fixed Saver 1 Year 1.55% Online, phone
Habib Bank Zurich plc HBZ Fixed Rate eDeposit 1.55% Online
Investec Bank plc 1 Year Fixed Term Deposit 1.55% Online
Shawbrook Bank 1 Year Fixed Rate Bond Issue 62 1.55% Online

Meanwhile, savers looking for the top rates in the five year fixed rate chart will find that all the top five rates are available to those able to open an account online. The top rate on a five year bond that can be opened in branch comes from Chorley Building Society, which pays 1.80% gross on its 5 Year Fixed Rate Bond (31.10.24). This compares to the top rate available in the chart overall offering 2.10% gross. This rate comes from Gatehouse Bank, which pays it as an expected profit rate on its Fixed Term Deposit and Raisin UK – 5 Year Fixed Term Deposit. Both accounts can only be opened online and offer a rate 0.30% higher than the rate offered by the Chorley Building Society account.

Top five year bond rates

Provider Account Rate Opening method
Gatehouse Bank Fixed Term Deposit 2.10% (expected profit rate) Online
Gatehouse Bank Raisin UK – 5 Year Fixed Term Deposit 2.10% (expected profit rate) Online
Aldermore 5 Year Fixed Rate Account 2.00% Online
Bank of London and The Middle East Premier Deposit Account 2.00% (expected profit rate) Online
Ikano Bank Fixed 5 Year Saver 1.91% Online

Savers looking for an easy access account will, again, find that the top rates are only available to those who are prepared to open the account online. Saying this, two of the three accounts offering the third best rate of 1.30% gross are available on accounts that can be opened in branch, which are Britannia and Loughborough Building Society, but it should be noted the Loughborough Building Society account is only available to those aged 16-25.

Top easy access savings accounts

Provider Account Rate Opening method
Ford Money Flexible Saver 1.35% Online, phone
Virgin Money Double Take E-Saver Issue 14 1.31% Online
Britannia Select Access Saver 11 1.30% Online, in branch, phone
Loughborough Building Society Future First 1.30% In branch, post
Yorkshire Building Society 1 Year Limited Access Saver Issue 3 1.30% Online

Impact on banking in branch

Consumers preferring or who are restricted to only banking in branch are clearly facing the negative impact of both branch closures and lower saving rates. Although banks are citing that customers are preferring to bank online or via mobile apps, the fact that higher rates and more choice is available for those banking this way could be a factor in customers turning away from traditional in branch banking and opting for online alternatives instead.

Commenting on the availability of banking in branch, Rachel Springall, finance expert at Moneyfacts.co.uk said: “It’s disappointing to see that more branch closures are expected this year. There may well be savers out there who prefer not to go online or who rely on a bank branch due to accessibility reasons. These consumers may then not be able to get the best possible return on their hard-earned cash, as the top rates are typically available online. Indeed, if savers were to choose a high street bank for convenience and familiarity, they may find the rate offered is poor. There are also very few accounts out there dedicated to older savers or which offer an enhanced rate for a savers loyalty, so shopping around online for the top rates is the quickest way to find the best deal.”

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