Banks shut eight branches a week since 2016
British banks have accelerated their retreat from the high street, shutting an average of eight branches a week since 2016 in a dash to bulk up digital offerings.
Nearly 3,700 sites closed between 2016 and 2024, creating 41 ‘banking deserts,’ which refer to local authorities where at least one branch shut for every 10,000 residents.
London has been particularly ripe for closures. Westminster tops the list with 3.5 closures per 10,000 residents, according to fresh research from investment platform Lightyear.
Barclays and Natwest led the biggest chops, shuttering 1,236 and 950 branches respectively.
Their ‘Big Four’ banking peers Lloyds and HSBC followed at 855 and 743. Santander also shuttered nearly 500 sites.
But public and political backlash has forced some banks to pause closures to maintain customer trust. Barclays pledged not to close any more branches this year or in 2026, while Nationwide promised to keep all locations open “until at least the start of 2028”.
Businesses embrace digital offering
Despite the high street shake-up, Lightyear’s data shows entrepreneurs have adapted.
Banking desert areas have still managed to birth high numbers of businesses, despite the erosion of in-person access.
Camden, which has closed 1.9 sites for each 10,000 residents, created 1,267 new businesses in the last eight years.
Wander Rutgers, UK chief of Lightyear, said: “That nearly two million new businesses have launched in England over the past nine years is a powerful reminder that entrepreneurial spirit is alive and thriving. But it’s also telling that this surge has come alongside the mass closure of high street bank branches.”
Rutgers added the traditional banking landscape had struggled to “keep pace with the speed, flexibility and digital-first mindset that today’s businesses need”.
While smaller firms have embraced digital banking, the high street players have been slower to catch up.
Banking industry body UK Finance revealed legacy lenders are making a comeback to small business finance after pulling back. But analysts warn that fintechs, which now dominate, won’t be rattled by the return
Challenger banks make up around 60 per cent of gross lending to SMEs, according to the British Business Bank, with specialists such as Allica and Oaknorth posting record numbers on the back of the Big Four banks losing dominance.
Further shakeups
Despite rising concerns, banks are pressing ahead with their plans.
Santander’s recent takeover of TSB sparked questions about the latter’s future on the high street.
The bank has taken a hard-nosed approach to restructuring, pushing provisions for liabilities and charges up 69 per cent to £140m. Of that, £42m was linked to “changes to our branch network”
Industry chiefs have plotted overhauls of their operations, and analysts have noted branch closures as a key part “despite political pushback”.
Over 370 closures are pencilled in for the coming year, with Halifax and Santander set to lead the pack at 99 and 95.
Post Office subs in for banks
As banks vanish, the Post Office has stepped in.
A five-year banking deal was reached between lenders and the Post Office in June in a bid to keep cash services running amid scarce high streets.
The agreement enables customers of 30 banks and building societies to use their local Post Office to withdraw and deposit cash as well as make balance queries and deposit cheques.
The deal was inked after the service produced 760 million transactions at its sites since January 2020.
This followed a scathing report from the Treasury Committee that said the UK risks a “two-tier society” if the government does not act on cash acceptance.
Widespread branch closures have spiked concerns regarding cash acceptance, particularly for vulnerable groups.
The increased difficulty to withdraw, deposit or exchange cash has accelerated the shift to digital payments but elevated worries some were being left behind.
Chair of the Treasury Select Committee Dame Meg Hillier MP said the government “is in the dark on how widely cash is being accepted and that is completely unsustainable”.