UK bank branch cull continues as TSB condemns 70 more

TSB will close another 70 branches next year as the bank sees no prospect of branch use returning to pre-Covid-19 pandemic levels.

The migration of customers to digital channels accelerated during the Covid-19 lockdowns when consumers new to digital banking services, particularly older generations, were forced to use them.

TSB said more than 90% of customer transactions are now carried out digitally and 90% of mortgage appointments are done via video.

Robin Bulloch, TSB’s chief customer officer, said while it was a tough decision, closing branches would enable the bank to create the right mix of channels.

“Closing branches is an incredibly difficult decision to take, but we have to respond to the changes in the way people bank and provide the right mix of services for all our customers now and into the future,” he said. “These changes allow us to maintain an extensive branch presence across the country.”

TSB, which had 600 UK branches in 2015, will be left with 220 branches after the latest round of closures.

Bulloch said TSB was also upgrading remaining branches and introducing “pop-up” services in communities that require them. “[The closures] are accompanied by a significant investment programme to upgrade branches to better suit customer needs. And, where it takes longer to get to the nearest branch, we will introduce more ‘pop-up’ services in communities,” he said.

A total of 140 branches will be upgraded with new technology and 41 communities are already receiving face-to-face services at pop-up branches. Pop-up locations include Bishop’s Stortford, Camberley, Fort William, Greenwich, Harlesden, Louth, Redcar, Stranraer, Thurso and Tunbridge Wells.

The bank said 150 TSB staff would be affected by the closures, but all of them would be offered alternative roles.

TSB planned to reduce the number of branches and increase digital services two years ago, but the Covid-19 pandemic and subsequent shift to online banking by consumers meant plans were brought forward.

According to a recent report by the Economist Intelligence Unit for financial services software firm Temenos, 65% of executives believe the branch-based banking model will be dead in five years’ time.

The latest technologies such as cloud, artificial intelligence and application programming interfaces are seen as the drivers of this transformation, according to two-thirds of the senior banking executives who responded to the survey.

There has been a steady flow of branch closures by major banks since the cost-cutting measures put in place following the 2008 financial crisis. This has gradually accelerated as digital channels, such as mobile banking, and digital challenger banks came on the scene. But the dam broke when Covid-19 restrictions forced consumers to use digital banking channels, with consumers across all income and age groups now familiar with online banking.

A survey of 10,000 people, which included 1,000 UK respondents, carried out by 3Gem for software company SAS found that over a quarter (26%) of banking customers would replace branch visits with digital services, while about 19% intended to use a blend of the two.