Dr Tim King, Senior Lecturer in Finance, Banking and Innovation at Kent Business School, and Dr Walter Gontarek, CEO and Chairman of Chanel Capital Advisors jointly commented on the trends towards digital banking and financial services in the future:
TSB Bank plc, a major Spanish owned UK retail bank, have announced the closure of a further 164 branches today and 960 job cuts. Generally speaking, this shift is driven by both consumer demand, advances in technology and industry regulatory frameworks that have resulted in a decline in traditional banking business models. These trends have gathered further traction in the wake of the current Covid-19 pandemic as people have become increasingly accustomed to online banking platforms. This trend is also evident in decisions made by banks including Co-operative bank and NatWest Group this year, the arrival of digital banks, including Monzo, Revolut, Marcus, and the August announcement that JP Morgan would launch a UK digital bank.
The branch closures announced today are likely to encourage existing customers to further evaluate online options with TSB or switch to challenger or other banks. In the wake of such incidences, and with the 2007-2009 global financial crisis and now Covid-19 pandemic fresh in peoples’ minds, at the core of such decisions are likely to be banks’ reputations and customer satisfaction scores.
This trend towards further digital banking may have far-reaching implications for customer experience, employment trends, and the risk management of regulated financial services activities in the UK.
We would not be surprised to see further shifts towards digital financial services (including wealth management, stock trading/investments and insurance for example) as client behaviours reset during the economic crisis related to the pandemic. The future is bright but digital!