Banks and savers alike are increasingly pulling back from branches, according to new research, as digital services offer lower operational costs for firms and better savings account deals.
The rate of UK bank and building society branch closures has sped up over the last two years, analysis of industry data by Investec Bank found, as lenders shut 633 locations in 2023, up from 425 in 2022.
It added that the pace was already picking up in 2024, with 245 closures confirmed so far this year and 106 branches due to close in the first quarter – up 39 per cent from 76 during the same period last year.
Greater London has seen the most closures of any UK region in recent years, with 202 locations shut between 1 January 2022 and 4 March 2024.
Meanwhile, Investec found through a survey of 1,088 people that 13 per cent of UK adults claimed to have closed at least one branch-based savings account in the past two years, with 63 per cent of these people moving their money into digitally managed accounts.
It added that six per cent of customers with branch-based savings accounts, more than a million people, expected to close them within the next 12 months.
Big banks have come under fire for offering less competitive savings rates to customers with branch-based accounts. Digital-only banks that do not run branches often offer the best rates, partly because they have lower overheads, meaning they can afford to pay savers more.
Of customers who moved their money into digital savings accounts, 41 per cent chose instant access accounts, 37 per cent chose fixed-rate deals and 13 per cent opted for notice accounts.
David Hunt, head of retail savings at Investec, said: “It is well documented that many bank and building society branches have been closing. At the same time, more people have been closing savings accounts linked to them and opening online ones.
“Many of the best-buy accounts are online-only, so switching from branch-based accounts could see
you receive a better rate of interest on your savings.”