High-street banks across the UK have lost around £100bn in customer savings over the past five years, as more people move their money to online banks and building societies. According to new figures, traditional banks’ deposit market share fell from 84% in 2019 to 80% in 2024.
The shift has occurred amid growing criticism that banks failed to pass on interest-rate rises to savers. Accusations of “profiteering” have sparked public frustration and calls for a windfall tax on bank profits, something adopted in countries like the Czech Republic, Lithuania and Spain. UK politicians, however, have so far resisted the idea.
At the same time, the banking sector has experienced its first significant profit downturn since the post-pandemic rebound. Combined pre-tax profits fell by £3.7bn in 2024. Average return on equity, a key measure of bank performance, is also expected to drop sharply, from 13% in 2023 to 8% by 2027. That would equate to an £11bn fall in annual profits.
Rising costs are compounding the pressure on profits. Operating expenses across the sector increased by 6% last year, while a fall in worker productivity has also affected profitability.
The figures reflect a period of increasing strain for traditional lenders. As challenger banks continue to offer more competitive returns and economic pressures persist, high-street banks may find it harder to win back customer trust or deposits.
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