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Banking is going through a sea change … can the tanker turn around?

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I noted the disconnect between the bank community and the technology community sometime ago in my Red Pill moment, and as the year passes it becomes more and more obvious to me that we are going through a sea change in finance.

Almost every day, I encounter a new start-up who wants to change some part of the banking system.

Almost every day, I see news of a successful new business model in P2P lending, crowdfunding, front-end aggregation, PFM, mobile payments and more.

Almost every day, someone tells me how bitcoin is going to destroy the old banking system by working its way around that system.

Then I go to my banking conferences, and the people in suits – 1,000’s of Mr. Smiths here, as someone tweeted at SIBOS this year – spend all of their time talking about technicalities.

Almost every conference, there’s a dialogue about risk, regulations and compliance.

Almost every conference, there’s a focus upon the legacy and how to change and adapt a slow-moving organisation that’s hard to turn-around.

Almost every conference, there’s a palpable sense of avoiding talking about anything to do with excitement and opportunity as we would rather talk about the challenge and cost of change.

The latter camp always seems to talk about how difficult everything is whereas the former talk about how great everything will be.

We live in interesting times, as they say, and I think all of the above has been well illustrated by the announcements of Barclays Bank and Lloyds Banking Group over the past two months.

Barclays announced a whole set of interesting stats in September:

  • Barclays smartphone banking apps accessed 32 times every second
  • £4.7 billion in transactions are processed using smartphone apps every month; that’s over £1,800 every second or £109,000 every minute
  • Barclays Mobile Banking now accounts for 75% of all digital logins
  • An average Barclays customer visits a branch less than twice a month but uses Mobile Banking 26 times a month
  • Mobile Banking and Pingit Apps have been downloaded more than 9 million times since their launch two years ago, and are being accessed 19 million times each week

This was followed by Lloyds announcement yesterday of a further 9,000 front-line jobs to go as up to 200 of their 2,000 branches are closed.


In an article in The Observer, Lloyds’ announcement was alerted by a comment from the bank’s Chairman, Lord Blackwell, saying that “the industry faces more change in the next 10 years than there has been in the past 200”.

Lord Blackwell was specifically referring to the digital revolution in banking and the fact that Lloyds would confirm to its workforce the impact the increasingly digital world will have on their working lives (massive job losses).  Meanwhile, the bank has pledged £1 billion in digital transformation over the next three years.

As the article notes, “it is a phenomenon facing more than just Lloyds. The British Bankers Association has calculated that £1 billion of transactions a day are now done via mobile and internet banking. More than 15,000 people download a banking app each a day. Since 2000, 2,359 high-street branches have already closed.”

In a similar article the month before, Deutsche Bank analysts reckon that the average UK bank will need just 500 branches by the end of the decade.  Lloyds Banking Group has more than 2,200, RBS 2,000, Barclays 1,500 and HSBC 1,150 – meaning banks could chop a further 4,850 branches and still serve the whole nation efficiently.

Deutsche Bank also note: “How many investors realised that the Co-op has cut 30% of its branches over the last eighteen months?”

Everywhere, branches are being cut and legacy systems are being adapted.  In the bank’s head offices, there is a further lengthy debate about audit, compliance, regulations, risk, ring fencing, governance and more.

With all that to deal with, it’s no wonder the new entrants are looking ot make a mint out of exploiting the banks’ weak underbelly: namely that they are all dealing with changing an out-of-date unworkable system to try to fit the digital age.

As the bitcoin folks said yesterday (tweets by @JustusRanvier):

Related articles: 

The Finanser - This bank branch is dead ... no it's not! It's, uh, resting ... 

BAI - Branch of the Future Network Innovations (what branch of the future?)


Chris Skinner Author Avatar

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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