There has been a net decline of almost 50% in bank units in the UK since 2014, but over a third of these, or 4,150, have been redeveloped as alternative uses including shops, restaurants and cafes and service-led offerings, according to a wide-ranging Savills review.
The UK's retail banking landscape has radically changed over the last 30 years with towns and cities often seeing a dramatic decline in the number of physical branches.
Savills points out that the 2008 global financial crisis saw several household-name banks and building societies collapse or be bailed out, as well as store closures due to mergers and cost cutting measures. In addition an increased focus on online and mobile banking has resulted in the sector reducing the amount of physical space it operates from.
Savills reports that by 2014 the banking sector had already shrunk from 13,600 high street locations, to 11,200, with a vacancy rate of 17.5%. But it says the most significant change to the retail banking sector has happened over the years that followed.
It has reviewed data from itself and Experian from 2014 to 2023 and found that there has been a net decline of 50% of all banks in the period.
The figure takes account of the the addition of 565 new sites that have opened or relocated. Of the 2014 stock specifically, almost 5,100 units (43%) remain operational in 2023.
Of these Savills says 21% remain vacant but over a third of units (4,150) have now been re-purposed to provide an alternative retail, leisure or service-led offering.
Thirty-one percent have been repositioned within the financial or retail services sector largely due to planning restrictions, Savills points out.
But it says this is changing because of the more flexible E-class designation introduced in 2020 planning, leading to an increased proportion of units changing their use to an entirely different sector.
Savills says the food and beverage sector has accounts for 900 units (22%).
Over half of these banks are now cafés or bakeries, such as Costa, Café Nero and Gail's, and a quarter are restaurants such as Cote, Kokoro and Franco Manca. In total Savills has tracked 650 different food and beverage brands, which shows it has "also been an opportunity for independent businesses to take space in prominent locations that a few years ago would have been unaffordable".
Savills says other sectors include 650 comparison goods shops - the likes of Specsavers and Card Factory, 420 hair and health and beauty salons and 200 fashion stores, such as Seasalt and Alpkit. Savills says all of these add a different value to consumers and communities in those locations.
The adviser says the decline in physical bank branches continues to affect many high streets across the UK with the loss disproportionately affecting some demographic groups. But it adds that the reality is that their low usage reduces high street vitality, and repurposing can help high streets.
The report's joint author, retail research analyst, Natasha Austerberry, writes: "The conversion of an empty high street bank unit to a bakery, where customers queue out of the door, or a café with tables outside, or a hair salon or vets where people visit throughout the day, can be transformational to consumer and market perception.
"There remain too many vacant banks with further closures planned for 2024, but as more of these units repurpose into new retail and leisure spaces, in the long term there can be a positive outcome for the town and city centres in which they are located."
Speaking to CoStar News, Tom Whittington, director in retail research at Savills, says while it would be wrong to underestimate the negative impact losing banks has had for some communities, it is important to recognise how the often highly prominent and historic town centre buildings banks have occupied have been increasingly repurposed to ward off commercial decline and help revive UK high streets.
"Vacated banks can provide new opportunities for buildings to rise again like a phoenix from the flames. Ultimately there has to be demand for buildings for them to be functioning. Often repurposing has led to a very positive story for high streets. In my home town of Knutsford we have three former banks that are now vibrant food and beverage offers. The Gail's coffee shop has queues out the door."
The government is considering bringing in legislation to prevent the last physical banks in town centres from closing.
Whittington says there is a lot to be learned from those redevelopments of vacated banks that have proved successful. "I feel confident that in the next five years there will be an even more positive story emerging about what happened with our vacated banks."