Santander shrinks its UK footprint: a sign of the inevitable?

Today, Santander bank announced changes to its branch network, planning to shut 95 of its 444 branches in the UK. Within the rise of digital banking, since 2019 the bank has seen a 63% increase in digital transactions, whereas transactions completed physically at a branch fell by 61%. The branch closures are the result of the Spanish lender seeking to explore other options for business making in the UK. 

As part of the changes, the new network will consist of 18 completely counter-free branches, 36 locations with reduced service hours alongside 290 full-serviced branches, and five Work/Cafés. In replacement of the closed locations, the Spanish lender will introduce Community Bankers, who will be mobile advisors, visiting the assigned communities weekly and providing support for customers. The bank will continue to invest in Work/Cafés, two of which have recently opened. The Work/Café is a global concept of providing working space for customers and non-customers for local communities that Santander started to pursue in 2016. 

However, it isn’t just Santander who started the trend. According to a report by consumer group Which? over 6000 bank branches have been closed in Great Britain in the last 9 years. With Lloyds Banking Group planning to close 136 branches next year, the Spanish bank’s decision to shrink its UK network of branches proves that the financial institutions recalibrate their priorities, strengthening reliance on digital banking. It could be largely attributable to the change in consumer behavior: today’s competitiveness of financial services is based on convenience, speed, and accessibility, leading to serious long-term cost inefficiencies in maintaining a large network of physical branches. That leaves us questioning not whether banks will shift further into digital presence but rather how fast will it happen. 

Nevertheless, this trend raises a flag about potential financial inclusion. Shifting to a more digital approach is based on the assumption that customers have access to smartphones, stable internet connections, and general digital literacy comprehension – it isn't true for everyone. If banks decide to make more drastic changes toward digital banking, those without the means or necessary knowledge would be left without essential financial services. The role of maintaining the balance between innovative changes and accessibility will lay in governments and regulators. That said, financial institutions must remember that although digital transformation is inevitable, the human touch must not be entirely lost.

The financial world will continue to redefine itself, leaving us with questions on how the banking world will look in the years to come. Will we live in a world where physical bank branches are relics of the past? While there is no correct answer at this time, we can say with all certainty that digital banking is not a future – it is the present.