DEBATE: Do banks still need a high-street presence?
Monzo, Revolut and Starling are all household names. People can open accounts without ever speaking with an employee and most don’t have any branches at all. High-street banks are also closing down and the mass transition towards online banking has only been expedited by the pandemic. Do banks still need a high street presence?
Gareth Shaw, head of money at consumer group Which? says Yes
Thousands of local communities across the UK have been stripped of their bank branches in recent years, as firms argue that bricks and mortar locations don’t get the footfall to make them financially viable now that more and more of our banking is done online.
But it is a mistake to assume that nobody needs to use a bank branch anymore – in fact they remain a lifeline for some. Not everyone is ready or able to take advantage of the benefits of digital banking, and closures can have a significant impact on those who rely on branches for essential banking services, particularly if they are vulnerable or live in an area with poor connectivity.
The pace at which the branch network is shrinking is going unchecked, meaning that these consumers risk being abandoned when their local branch closes. There are a range of solutions, such as shared banking hubs, which could help fill the gap, but the government and FCA must ensure that there is effective oversight of the system so that consumers who depend on these services can continue to access them locally.
Jamie Parker, co-founder Fintech software provider Heron Data says No
Marc Andreessen, co-founder of one of America’s top venture capital funds a16z famously said that “software is eating the world”. Ten years later, it certainly has not lost its appetite.
Smartphone and internet usage is ubiquitous. Consumers and businesses alike are increasingly comfortable with a 100 per cent online experience for financial products. The recent winners in retail banking, business banking, insurance and mortgages are all online only.
Even business lending – historically a haven for big banks – is being disrupted by revenue-based lenders like ClearCo, Wayflyer, and Uncapped who can underwrite £2m loans in a matter of minutes, rather than days.
These companies focus on one channel – online. They are technology-first businesses with superior engineering talent, who build products that are customer-centric and convenient. They have a higher technical velocity than the incumbents, because they believe that not only can you do everything online, but your experience is better because it is online.
Maintaining a physical presence is a distraction for High Street banks’, giving competitors an advantage. The banks who will survive and thrive need to recognise that when it comes to finance, the software that Andreessen talked about hasn’t even finished its starter.
