Finance

Metro Bank CEO: There’s a ‘golden number’ of bank branches Britain needs

By Oliver Smith 13 March 2017
Summary

But thousands of bank branches need to close first.

Hundreds of high street bank branches are closing across Britain.

Clearly as banking goes digital we’re not going to need as many branches as we used to, but how many will we be left with?

In 1988 there were a whopping 20,583 bank branches across the UK, today that figure is believed to be around 8,000 and falling fast.

Craig Donaldson, CEO of Metro Bank, the only high street bank currently opening stores, has a perfect number of branches per British bank in mind.

His number? 250.

Metro Bank CEO Craig Donaldson

The dream number of banks

250, says Donaldson, is the ideal number of stores to serve a country the size of Britain.

Although he says most of the larger banking groups are probably aiming to shrink to between 450 and 650 branches, due to marginal stores which serve just enough people to warrant keeping open.

“So on one hand you’ve got the big banks sitting at 2,000 and us sitting at basically zero,” Donaldson told The Memo.

“We’re growing to 250 while they’re probably shrinking… to between 450 and 650 stores.”

Read more: Metro Bank bets branches will still be around in 2050 – but they’ll be radically different

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A wholly different high street

A fall in branch numbers, even to 650, would be a huge change to what we think of as the traditional high street.

For one of Britain’s largest banking groups, the Royal Bank of Scotland and NatWest, it would mean the closure of nearly 1,500 branches, with hundreds of closures from the other banks too.

But while some doomsayers have called the current rate of bank closures (over 1,000 in the past 12 months alone) the end of high street banking, Donaldson believes banks are here to stay and that these closures are just part of our adjustment to digital banking.

“I still sometimes want to collect foreign currency, I still sometimes actually wanted to get a new bank card printed because my son had broken another one, I sometimes want to come in when I want a new mortgage and I want to sit down with everybody,” said Donaldson.

“I still think there are needs, and there always will be.”

Even for mobile-first challenger banks life won’t be entirely digital. Donaldson says the CEO of one of these banks recently admitted to him that their digital bank would still still have to partner with a traditional high street bank in order to accept cash and cheques.

What is certain is that this new world of high street banking is going to dramatically recast our relationships with our bank branches.

As branches inevitably disappear, banks will become destinations that Brits have to travel to, rather than conveniences that just happen to be on every high street.

That’s the inconvenient truth of banking’s future.

Read more: The design secrets behind Metro Bank’s store