The rise of faceless banking: are we becoming a nation of online savers?

Amidst the wave of branch closures in recent years, Britons are feeling more and more confident in managing their finances online.

According to two separate studies from Investec and comparison site NerdWallet, a growing number of savings and checking account customers are now willing to avoid branches in favor of the convenience and convenience of managing their money online.

Three in five Britons would now consider using a bank without a physical branch, with up to two in five willing to have a digital-only bank as their one and only supplier, the research shows.

Two in five savers say they are now spending more time managing their money than before the pandemic, mainly through online access.

More than a third of people say they chose their bank based on online functionality, and nearly a quarter are influenced in their decision by the convenience offered by the bank’s app.

Banks and building societies have closed or scheduled the closure of 4,299 branches since January 2015, according to consumer group Which? at the rate of about 50 per month.

With over 300 branch closures in the UK already confirmed by Santander, Lloyds, Halifax, HSBC, NatWest and Barclays this year, online banking is becoming more and more necessary for many Brits as the number decreases. physical options.

Britain’s six largest banks and the country’s largest mortgage lender, Nationwide, have 5,069 branches, of which 213 are the last in the city.

All banks attribute the branch closures to the rise of online banking, which they say has led to a drop in footfall forcing them to prioritize investments in digital services.

HSBC boss Ian Stuart said the number of customers using its branches has fallen by almost 40% in the past five years.

Almost a quarter of Britons say their choice of bank is influenced by the convenience offered by the bank's mobile app.

Almost a quarter of Britons say their choice of bank is influenced by the convenience offered by the bank’s mobile app.

Despite the change, there are still a large number of Brits who appreciate the continued presence of branches in their area and are concerned about the closures.

More than one in five people said they would like to use both a digital and conventional bank with branches, according to NerdWallet research, with more than one in four people choosing their bank based on its proximity to a branch. local branch.

Of those who said they would like both digital and conventional banking, almost half said they appreciated the security of a traditional bank as well, while 43% said they still weren’t. not fully confident in the new options only online.

Banks and building societies have closed or scheduled the closure of 4,299 branches since January 2015.

Banks and building societies have closed or scheduled the closure of 4,299 branches since January 2015.

It was also revealed that two in five Britons surveyed are worried that older parents will not have access to banking services in the future, and more than half were concerned about the death of Main Street.

Denise Ko Genovese, NerdWallet, said: “The shift to digital banking is very apparent and this trend is undeniably a contributing factor to bank branch closures.

“As everything becomes more digital, banks and other service providers are also expected to evolve to meet the modern needs of the public as well – 24/7 remote access, immediate transactions. and continuous budget tracking are just a few perks online. banking provides.

“But we are in a period of transition and physical branches clearly still have a role to play in the banking landscape.”

Are people turning to online checking account providers?

The research seems to ring true when you consider the numbers for the current account switching service.

Some of the large, familiar banks continued to be shunned in favor of challenger banks based on online applications such as Starling and Monzo.

For example, since early 2018, TSB and Barclays have recorded net customer losses of 116,847 and 90,290 respectively for users of the seven-day switching service.

Monzo and Starling Bank, which have no physical branches, recorded net customer gains of 131,290 and 110,505 respectively over the same period.

The most cited reason for favoring a new account continues to be “non-financial” according to the checking account switching service.

Online and mobile banking offers and better customer service were reported as the most common reasons customers would switch bank accounts, rather than proximity to a local branch for example.

Are more people managing their savings online?

A separate Investec study also found that Britons are spending more time managing their savings than at the start of the pandemic, with a greater propensity to do so online.

During the pandemic, more than one in ten savers started managing their money online for the first time during the crisis, with many saying they downloaded an app for the first time.

The move online is partly explained by the fact that 8% of savers say they stopped using branch accounts during the pandemic.

Seven in ten people with savings accounts say they now only use digital platforms to manage them, while only one in 20 say they only use call centers and branches to manage their savings.

Samantha Booysen, Head of Digital Savings at Investec, said: “It is encouraging to see so many people with savings accounts spending more time managing them.

“Digital services and platforms can make it much easier for many people to do this, with better access to their money.

“It will also help savers spot any significant changes to their accounts, allow them to switch easily if they are not happy with the interest rate and the overall service they receive.”

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Nancy Owens

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