Published : 7 years ago, on 23/05/2018

• But UK consumer bank branch visits set to stabilise in the next five years, with growth in overall banking interactions
• Older, rural consumers set to drive future digital migration
• 7/10 of UK adults to use mobile banking by 2023

Research from financial services and data specialist CACI reveals that the average number of bank branch visits by UK consumers has dropped to five per year, but is set to stabilise in the next five years as digital migration slows.

This will be helped by resilient numbers of bank branch visitors, with CACI predicting only a modest decline of 6% of visitors in the next five years. This suggests that customers are looking to integrate the branch alongside digital channel usage. As a result of changing customer behaviour, CACI figures show that for UK banks to cover 80% of the market opportunity in the UK in five years’ time, they will need 600 branches.

Mobile banking out in front

While bank branches remain important, digital channel banking now sees 22 million customers using mobile banking apps to manage current accounts, an average increase of 3.4 million users per year in the last 5 years. By 2023 this should reach 35 million, which is 60% of current account holders, with a 113% increase in mobile banking interactions from consumers. But while digital channel activity is growing, the overall digital migration of the population is slowing: once mobile banking usage exceeds 70% of adult consumers, there will be a slowdown led by less-affluent groups.

Jamie Morawiec, Associate Partner, CACI says: “While digital certainly has an impact on bank branches, our figures show there is a continued role for branches as part of the channel mix. Some transactions will continue to be branch-dependent, while more considered purchases – mortgages, investment products – will continue to drive footfall throughout the next five years.

“It’s clear that the first wave of digital banking migration has taken place in the UK and what we will see in the next five years is a different demographic driving digital growth. At the moment, rural areas and coastal towns have low levels of digital channel use. But as their populations of older consumers begin to increasingly adopt digital banking, towns like Clacton-On-Sea and Southport will see growth in mobile users by up to 74%. This contrasts with large urban areas, which already have much higher numbers of mobile users. Almost half of customers in places like London, Oxford and Brighton are already using apps to manage their current accounts.”

Internet banking slowdown

The growth of mobile banking will see it replace internet banking as the most popular digital channel in 2019, in terms of users. Internet banking will see decreasing log-ons (down 62%) and decreasing numbers of users in the next five years. Again, changes in behaviour from older demographics are driving this change, with drops in internet users forecast with a rise in mobile banking activity expected.

The changes in digital banking point to a wider convergence, with digital banking no longer needing two separate channels – internet and mobile – particularly as apps’ increased functionality allow new users to move straight to smartphones and tablets to manage their accounts. Digital channels will drive an overall increase in the number of banking interactions.

Factsheet:

2018 (interactions by million)

• Branch interactions: 246 (2017: 261)
• Internet (computer) interactions: 532 (217: 567)
• Mobile interactions: 1,530 (2017: 1,403)
• Telephone interactions: 60 (2017: 67)
• Total interactions: 2,368 (2017: 2,298)

2023 (interactions by million)

• Branch interactions: 164 – percentage difference -35%
• Internet (computer) interactions: 200 – percentage difference -62%
• Mobile interactions: 3,211– percentage difference +113%
• Telephone interactions: 44 – percentage difference -28%
• Total interactions: 3,619 – percentage difference +53%