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2025 will witness the demise of the High Street bank

2025 High Street bank

That’s the prediction made by the Economist Intelligence Unit (EIU) and banking software company, Temenos. Temenos AG is a company specialising in enterprise software for banks and financial services headquartered in Geneva, Switzerland.

A survey carried out by EIU and Temenos revealed an overwhelming proportion of European banks say that their bricks and mortar banks will be shut in just three years. The major banks have already shown their intentions to phase out their physical branches by 2025, 

A trend- that has been boosted by the Covid pandemic- has seen a massive momentum shift towards total online banking – most people with bank accounts these days never need to visit a branch. 

New enabling technology

New technology introduced into the market, including the increasing use of artificial intelligence (AI) the new revolutionary distributed ledger blockchain technology, will make online banking easier to use, faster and more secure- altogether a better experience for the user.

The major banks soon discovered through the pandemic that by far the majority of their customers can manage their financial and banking affairs perfectly well without visiting a branch- and will never miss them when they are gone!

With just under 5,000 bank branches potentially due to close over the next three years in the UK alone, let alone the rest of Europe, the implication for further disruption on high streets is stark – more vacant properties which were hitherto destination sites.

For the minority of customers still using branches, including the elderly and small businesses, the change is likely to be disruptive, though the banks have plans in the pipeline to ease this pain in the short term with mobile units, using Post Office banking and other measures. 

Gaining technical expertise

There are now many European banks with plans to gain more technology expertise by absorbing smaller financial technology (fintech) companies and challenger banks.

The future of online banking will very likely be in the fintech world, competence and security in this space will therefore be essential.

Traditional UK bank branches half lost over 50% of their high-street presence half since the trend first started as far back as 2000. However, the banks admit there is still some way to go to overcome barriers such as customer trust of banking Apps, AI and other aspects of their banking products.

“As AI becomes mainstream, banks need to establish a set of processes that provide transparency into the logic behind the decisions made by machine learning algorithms,” said Temenos chief science officer Hani Hagras.

The demise has already started

Nearly 5,000 bank branches have been closed since 2015 – or are scheduled to be shut – according to data from Which?, leaving millions of people at risk of being cut off from vital banking services.

In November 2021, TSB announced it will shut 70 banks across the UK this year as more customers switch to online. There will be just 220 branches left by the end of June 2022, compared to the 290 that were in operation in 2021. The closures mean TSB will have 150 fewer roles, but the bank says the workers affected will be offered alternative jobs.