New research reveals that 3,700 bank branches shut down across England between 2016 and 2024, averaging eight closures per week, suggesting UK entrepreneurialism is being bolstered by digital providers.
Analysis of data on the closure of banks by investment platform Lightyear finds that England is home to 41 ‘banking deserts’– local authorities that have seen at least one bank closure per 10,000 residents since 2016. These areas, many of which have still seen business growth, may be being served by the growing trend towards digital-first financial services.
Westminster, in London, tops the list with 80 closures across the borough in the last nine years — 3.5 closures for every 10,000 residents. The less populous Westmorland and Furness saw 2.5 closures for every 10,000, while Derbyshire Dales residents saw 2 closures by the same metric.
The closure of banks and banking services across local areas does not, however, seem to be dampening British entrepreneurialism. Over 2 million new businesses were created between 2017 and 2023, despite the headwinds of the pandemic and global economic uncertainty. Business deaths, on the other hand, are far outstripped by new enterprises, at just 1.2 million in the same period.
In Westmorland and Furness, 5,720 new businesses were created between 2017-23, the third highest rate of business creation per capita in England.
Similarly, Camden, which qualifies as a banking desert thanks to forty bank closures or 1.9 for each 10,000 residents, saw the births of over 1,267 new businesses in the last eight years.
New business creation in these areas, in spite of the shuttering of banking infrastructure around them, suggests an alternative and online approach to these services. According to RFI Global, nearly 2 in 5 UK SMEs now use digital-only banking providers, suggesting a broader trend of businesses turning to digital providers over high-street traditionalist channels to manage their money. With a potential market for business savings at £550bn*, digital-first, flexible financial management options for SMEs may win over.
Wander Rutgers, UK CEO of Lightyear, said: “That nearly 2 million new businesses have launched in England over the past nine years is a powerful reminder that entrepreneurial spirit is alive and thriving. But it’s also telling that this surge has come alongside the mass closure of high street bank branches. The traditional banking system is struggling to keep pace with the speed, flexibility, and digital-first mindset that today’s businesses need. Entrepreneurs are voting with their feet, and their funds, by turning to alternative platforms and products, like Money Market Funds, that are built for the way modern businesses need to save their money.”
