Many new specialist and challenger banks begin life – and continue to operate – as branchless banks.
Most of their operations will be conducted online, while some will deploy regional business development managers to attract business from around the UK.
However, a survey published in May by Saga found that 25% of over 50s would switch bank if their branch closed.
More and more traditional high street banks are closing branches, with Lloyds Banking Group announcing last November plans to close 49 branches.
Despite this, some challengers and specialist banks have been opening branches and regional offices to attract new business.
Challenger Metro Bank revealed at the beginning of this year that it planned to open 12 new stores in 2017.
In May, Metro reported that over one million accounts had been opened since its launch in 2010, while current account deposits grew year-on-year by 71%.
Could more specialist banks open branches or regional hubs?
“Our cloud-based technology – coupled with the fact that we are a branchless bank – has helped us keep a lid on costs and played a central role in enabling us to achieve cash flow break even in just 11 months,” said Joel Perlman, co-founder of OakNorth.
“The traditional bricks and mortar model is neither necessary, nor efficient, and by being branchless we’re able to not only be more agile, but can also pass on these savings to our retail deposit customers in the form of more competitive rates.”
While renting or buying property for branches would add to the costs of a specialist bank, opening regional hubs or offices may become more popular.
For example, Arbuthnot Latham Commercial Banking has opened regional offices in Manchester and Bristol to help serve customers in those regions.
Al Rayan Bank announced last year that it had opened an office in Glasgow to allow Scottish customers to access its range of Sharia-compliant products.
Joel added: “While we currently only have an office in London – where our entire business development team is based and where all of our credit committees take place – we do envisage needing to set up regional hubs as we scale.
“These will be small teams with specific knowledge of the region and, similarly to our office in London, will be places where pre-arranged meetings take place, rather than a walk-in traditional branch.
“We currently have an operations team and business desk in Manchester, so it would make sense to start there, and then look to other key cities for our borrowers, such as Birmingham, Leeds, Liverpool and Newcastle.”
SIGN UP TO OUR NEWSLETTER TO RECEIVE MORE NEWS LIKE THIS STORY
AIB provides funding for acquisition of 190 homes
AIB Corporate Banking has formed a partnership with Túath Housing Association to fund the acquisition of up to 190 social homes across every county and district in Ireland.
Virgin Money set to enter SME banking market
Virgin Money Holdings UK has announced plans to enter the UK SME banking market in January 2018.
British Business Bank welcomes extra £2.5bn government funding
The British Business Bank has welcomed the extra £2.5bn of government funding, announced in the Autumn Budget.
£11m UTB facility saves developer from considerable funding costs
United Trust Bank’s (UTB) structured finance team has provided an £11m facility to save a property development company from paying considerable funding costs.
Behind the scenes at Metro Bank’s new London store opening
Metro Bank opened its 52nd store in Liverpool Street, London, last Thursday (16th November), with the lord mayor of the City of London Alderman Charles Bowman cutting the ribbon.
Do people underestimate the scale of UK SMEs?
Only 2% of British people realise that SMEs make up 99% of total UK businesses, new research has revealed.
We need to aim higher than ‘a nation of shopkeepers’
I read an interesting newspaper article the other day with the headline: “UK bank scandals are making entrepreneurs reluctant borrowers”.
What are the key changes from the Autumn Budget 2017?
In the first Autumn Budget, the chancellor of the exchequer Philip Hammond has set out the government’s plan for the UK economy.
CYBG reports 6% lending growth
CYBG PLC has reported total lending growth of 6% during the year ending 30th September 2017.
Do enough businesses realise the benefits of asset finance?
Only one in 10 business owners (11%) describe the strength of their companies’ working capital facilities as “very strong”, even though their businesses are performing well, a report has revealed.