Financial News

  • 8 July 2014, 17:50

Digital Banking Growth Poses Risk To Branches

A report for the banking industry has boosted its case for reductions in high street branches in favour of digital banking.

The study by the British Bankers' Association (BBA) and Ernst & Young, known as EY, found that mobile phone and internet banking transactions had reached nearly £1bn a day in the UK.

It meant, the report said, that the technology was used for transactions worth £6.4bn a week, up from £5.8bn in the previous year while banking apps for mobile phones and tablets were being downloaded at a rate of around 15,000 a day in 2014.

The study, titled The Way We Bank Now, said contactless cards were also increasingly popular and were expected to see spending rise to £6.1 million a week this year,  up from #3.2 million in 2013.

BBA chief executive Anthony Browne said: "This report shows just how enthusiastically the British public is embracing mobile banking, contactless cards and a range of other consumer-friendly banking technologies.

"The way we bank now has made it a lot easier for us to keep track of our finances, with far more options about how we spend our money and talk to our bank."

Tariq Khatri, EY partner for digital financial services, said: "Digital banking is really shaking up the market, driving competition and innovation.

This is great news for consumers and also potentially for the UK economy.

"The British public's adoption of digital banking has reached critical mass this year and we believe the UK has a unique opportunity to achieve a leading position in digital banking."

The report was released as a growing number of banks announce plans to shut branches, as part of moves to save costs and shift investment towards digital banking.

Back in April, RBS cited a 30% fall in branch transactions since 2010 for its decision to shut 44 branches, including 12 classed as "last banks in town."

More recently it confirmed that as part of efforts to boost digital customer growth it would be placing iPads in branches to help customers get to grips with mobile banking technology.

Barclays, which like Lloyds has been considering branch closures, is looking at a possible move to opening services in supermarkets as banks face pressure to ensure all customers have reasonable access to their money.

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