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Others are looking to transform their branches into a ‘community hub’ by offering out offices above the bank to small business customers for meetings, Mead notes. “There is all the space upstairs that might otherwise have been redundant; you can also de-centralise call centre people into pods and put them there.”


Despite the growth of branchless startups, it is clear some customers still want to access High Street services. Recent events also indicate the branch isn’t going to go away completely. Amid a flurry of closures, government pressure last year forced major High Street banks in the UK to sign a deal allowing customers to use their local Post Office for banking.


So what does this mean for the future of physical banking? Mead observes: “If you want to transact, you are going to do it digitally. No one wants to build more infrastructure and banks will want fewer branches, so the gradual decline will continue for some time and they will make use of the sites they’ve got.”


As times goes on, branches will be less profitable


for banks, Twiddy says: “Is there going to be branch banking? Yes. But is it going to be profitable as it once was? No, and no one pretends it is.”


With this in mind, Allen predicts: “I think for many years it will be a happy balance between branchless banks and branches. I think part of it is tied to the idea of a cashless society – the physics of money plays into it too.”


In the future, Mead believes there will be fewer big branches. “I think they will be more conveniently located for customers; right now they are in the High Street and not near to parking.”


It is also likely there will be consolidation with larger banks possibly buying their digital rivals. On the other hand, the major players could launch ‘a bank within a bank’ by creating a new digital-only offering and in time migrating customers over, Mead suggests. As for the smaller players, he adds: “The new entrants talk about digital banking, so you could see them having relationships with other businesses such as Starbucks to form a combination of bricks and mortar and digital.”


www.ibsintelligence.com © IBS Intelligence 2016


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