Bank closures are changing how people save with branch-based accounts rapidly going out of favour as major institutions continue to shut branches, new research from Investec shows.
More than 8.4 million(2) customers have switched from branch-based accounts to other types of accounts because the bank or building society they used to manage their money has been closed, the study by Investec, which offers a range of digital accounts including instant access, fixed rate and notice accounts, shows.
The pressure on branch-based accounts is set to continue – analysis by Investec(3) reveals around 432 branches will shut this year taking the total for 2022/23 to 857. For more than a quarter (26%) of the closures there are no branches of other banks or building societies nearby.
Investec’s study shows more than half (53%) of adults – the equivalent of 28 million people(2) – have had savings in branch-based accounts in the past five years. But the rapid pace of branch closures has seen nearly a third (30%) switch to digital, postal or telephone-based accounts.
The research shows around 58% of people shutting branch-based accounts have done so in the past two years. The decline of branch-based accounts due to branch closures is however well-established with around a fifth (20%) saying they shut accounts because of branch closures more than four years ago.
More than half (52%) transferred all the cash from the branch-based account they shut into a new account while another 38% transferred some of the money to other accounts. On average the accounts had £6,250 in them.
David Hunt, Head of Retail Savings at Investec, said: “Branch-based accounts have been very popular, but bank branch closures are making it difficult for customers to manage their money which is driving huge growth for digital accounts which can be opened immediately online.”
“They offer ease of access and are simple to set up and manage on an ongoing basis. Crucially they also offer the most competitive interest rates across the full range of accounts.”
Investec’s range of market-leading digital accounts includes its Online Flexi Saver for instant access, its Fixed Rate Saver for customers willing to lock money away for a year and its 90-Day Notice Saver offering a higher interest rate than instant access in exchange for 90 days’ notice on withdrawals.
The Online Flexi Saver account is a simple and secure instant access savings account that is easy to use online. It pays an interest rate of 3.82% AER* monthly on balances of between £5,000 and £250,000, provides instant access to savings, and allows unlimited deposits and withdrawals to a linked current account.
The Fixed Rate Saver provides simplicity and security for savers and pays an interest rate of 5.06% AER over a one-year fixed term on balances of between £5,000 and £250,000. Interest is paid at the end of the term. No withdrawals are permitted until the end of the one-year period, and no further deposits can be made after the first seven days.
The Investec 90-Day Notice Saver, which must be opened online, pays 4.25% AER* on balances of between £5,000 and £250,000. It also offers unlimited deposits and withdrawals, subject to a 90-day notice period.
