High street banks are on borrowed time

If you can’t speak to a human on the phone and your local branch has gone, why wouldn’t you choose a digital bank like Starling or Monzo instead?

What exactly do we now get from our high street banks? For generations, choosing a bank was barely a choice at all. You banked where your parents banked, where the nearest branch happened to be, or with whichever bank gave you your first account. Then, for the most part, you stayed. Research by the comparison company Finder suggests that half of us have never switched bank accounts.

Perhaps that made sense when a bank served so many purposes — it held your salary and savings, paid your bills, provided a mortgage and maybe insurance as well. There was a branch nearby and, importantly, people in it — some of whom you probably knew. As your finances became more complicated, the same branch could potentially help with investments, pensions and even financial planning.

Now digital-only banks such as Starling, Revolut and Monzo are making significant inroads into everyday banking. Finextra, a finance research company, said that the share of people holding their main debit card with one of these new banks rose from 1 per cent at the end of 2020 to 9 per cent at the end of 2024. Over the same period, the market share held by the six biggest banks fell from 85 per cent to 71 per cent. This isn’t surprising. If the relationship is going to be digital anyway, customers are likely to choose the company with the best technology and user experience.

And despite impressive profits in the banking sector, we are seeing swingeing job cuts on the high street. Barclays said last week that it was spending tens of millions on “organisational simplification”, while HSBC was reported to be planning substantial cuts to its UK wealth management operation. These changes are being made amid a broader push to integrate artificial intelligence into the banking business. 

I am a firm believer in AI. Used properly, it should be able to remove administrative work, reduce errors, improve processes and give advisers and relationship managers better information. Several companies have talked of equipping relationship managers with AI to help them serve customers more quickly, including through market insights and personalised investment strategies. Yet there is an important distinction between using AI to make a business and its people dramatically more effective and using it to replace the human altogether.

As people age and accumulate assets, their lives — financial and otherwise — often stop fitting into neat boxes. There may be a jumble of pensions, Isas, taxable investments, property and borrowings, alongside children, ageing parents, businesses, trusts and tax considerations. Technology can organise information brilliantly. It can identify patterns. It can also help us to understand certain options. However, for many, it is likely to support rather than replace a human interaction when it comes to personal choices and trade-offs.

And this raises an interesting question about the traditional banking model. If more specialist, human financial expertise becomes available to an ever-smaller group of wealthy customers, what about everybody below them? Is the universal bank becoming less universal? 

For decades banks benefited because the current account was the gateway to the rest of our financial lives. Once you had the customer, you had a reasonable chance of providing the mortgage, other loans, savings, investments and potentially also wealth management and financial planning advice. Now, technology allows consumers to choose the best company for each job. 

The great promise of technology is better service at lower cost. But customers will reasonably question that promise if technological transformation means automated interactions that don’t answer their questions. As AI further transforms financial services, the winners may be those firms who use it to make expertise more accessible, more personal and less expensive, rather than simply to place another layer of technology between a bank and its customers.

This doesn’t mean that the traditional bank will disappear. It may continue to provide the basic plumbing of our financial lives. But our broader needs may be met by a new generation of specialist firms, each able to do one part of the job better than the high street banks that once did everything.

This article is for informational purposes only and does not constitute financial advice. This is the opinion of Charlotte Ransom as of 21 October 2026 and if you are unsure as to whether disinvesting or investing is suitable for you, please seek advice.